00:01
You have $400 ,000 saved into a retirement account.
00:04
It earns 9 % interest.
00:06
How much will you be able to pull out each month for 20 years if you want to take withdrawals for 20 years? so let's look and see what we have here.
00:16
That means we have, this is basically an annuity.
00:20
So we have our 400 ,000 is going to be our present value.
00:23
We're going to have our 9 % is not going to be our interest rate, but that's our annual interest rate.
00:30
So if i want to know my monthly, because i need monthly, i'm going to put 0 .09 over 12.
00:36
And so that's going to be the value that we put in place of r.
00:41
Now, n is the number of periods or the number of withdrawals.
00:45
So if we're going to do monthly withdrawals for 20 years, i need to go 12 times 20 to get to 40.
00:52
That's going to be my value of n.
00:54
So let's plug in.
00:56
We're going to have 400 ,000.
00:59
Equals my payment, which is what we're looking for, and i'm just going to put p, 1 plus 1 plus 0 .09 over 12 to the negative 240, and then i'm going to put that over 0 .09 over 12.
01:15
That's going to give me my payment amount, or how much your payment amount would be.
01:23
So now we solve that equation...