00:01
So in this problem, we are doing a retirement problem.
00:07
And in this, we want to withdraw 25 ,000 each year for 25 years when we're retired.
00:20
And we're going to retire in 15 years.
00:31
And our account is going to draw 7 % interest.
00:39
Okay.
00:49
So this is really a problem of, we're wanting to know how much we need to deposit each year to make this happen.
01:10
Okay, so the first way to do this is to take the $25 ,000 each year, those payments for 25 years, and at 7 % interest, and figure out the present value of those.
01:25
The present value formula is payment times 1 minus 1 over $1 .5.
01:36
1 plus r to the n divided by r.
01:45
So this is 25 ,000 times 1 minus 1 over 1 plus 0 .07 to the, how many years are we doing? 25th, all divided by 0 .07.
02:13
Okay, so this is 25 ,000 times one minus over 107.
02:31
I'm going to calculate all that first.
02:33
Okay, so 1 .07 to the 25th, and then i do one over that.
02:46
This is 0 .18425.
02:55
So this is 25 ,000 times 1 .5.
03:03
Minus 0 .01, 0 .1845 divided by 0 .07.
03:12
This is 11 .6536, which is 291 ,33939 .58...