I have a nest egg of $50,000 that earns 5.5% per year, compounded quarterly. If the nest egg is to be ?

Question

depleted to zero in 30 years, how much should be withdrawn each month?

a. $537

b. $340

c. $281

d. $230

Answer 1

i don't know where that other guy is getting C from.

the answer is A.

Answer 2

The answer is c.  Invest in an HP12c calculator and you'll save yourself a lot of trouble making these calculations.

Edit: Our Top Contributor is incorrect.  This question is just a rephrasing of an amortization problem.  See: http://www.bretwhissel.net/cgi-bin/amort... and let it calculate the "payment" which is identical to the withdrawal in the above scenario.

Per (a) the nest egg would be exhausted far faster than 30 years. Per (c) in 360 months.  The variation in the online calculator is to within a rounding error thanks to a slightly different compounding assumption.