4 You wish to withdraw 500o0 every December 31st for the nex

4. You wish to withdraw $50,0o0 every December 31st for the next six years (2018 2023) and you estimate that you will earn 8% on the investment, what is the most you need to invest today? (Round to the nearest $ and use tables)

Solution

Annual Withdrawal = $50,000
Number of Withdrawal = 6
Annual Interest Rate = 8%

Amount Invested = $50,000 * PVIFA(8%, 6)
Amount Invested = $50,000 * 4.6229
Amount Invested = $231,145

$231,145 must be invested so that $50,000 can be withdraw for next 6 years.