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**joe2k17****Member**

Hello,

Can anyone provide a formula to calculate how much should I spend yearly of the amount example of Z= 100.000$ + its yearly interest (considering I am getting on it a fixed I = 5% yearly interest ) ,so the whole amount and it s interest is totally consumed in X years.

example : if X=20 years and Z= 100.000$ and I = 5% (I,Z and X are variables)

first Year: Z= Amount 100.000$ +5%= 105.000$ and you took at the end of year Y=10.000$??? remaining is 95000$

Second year: Z=Amount 95000$ +5%= 99750$ and you you took at the end of year Y= 10.000$??? remaining is 89750$

.

.

20th year : ... Y=10.000$??? (if Y is correct remaining should be 0$)

I want to know what is the formula that give me the correct value of "Y" (fixed Amount) to take each year from

the "Amount"/Z + "Yearly Interest"/I so it reaches 0$ in X years.

Many Thanks

**abboudz****Member**

Let's take an example of 10 years.

Z=100,000

The formula for the future value based on compounded interest where r=5% is FV = PV * (1+r)^n

where FV = future value, PV = present value (100 000 in your case), and n is the number of periods (10 in your case).

FV = 100,000 (1.05)^10 = 162,889.5$

Next, the annuity formula (fixed annual payment) based on the FV is P = FV / ((1+r)^n -1)/r)

Plugging in the values, you get P = 12,950.4575$

I did this quickly at work so please double check the values again.

**abboudz****Member**

actually plz ignore this, now i understand the question, will correct my answer later

abboudz wrote:

Let's take an example of 10 years.

Z=100,000

The formula for the future value based on compounded interest where r=5% is FV = PV * (1+r)^n

where FV = future value, PV = present value (100 000 in your case), and n is the number of periods (10 in your case).FV = 100,000 (1.05)^10 = 162,889.5$

Next, the annuity formula (fixed annual payment) based on the FV is P = FV / ((1+r)^n -1)/r)

Plugging in the values, you get P = 12,950.4575$I did this quickly at work so please double check the values again.

**Draguen****Member**

Hey, in those cases, use Excel:

Take a basis value of 100 000, multiply it by 1.05 and remove 10 000: at the end of the first year you will have 95 000.

Now use the same formula but replace 100 000 by 95 000 and click and drag on excel. After 14 years you will be left with 2000 dol, after 15 years, you will have a debt of 7892 dol.

I can explain more in details if you need, but I'm on my phone for the moment

**abboudz****Member**

actually he wants the exact value that will result in a 0 NPV at year X. I'm at work too so can't spend much time on it sorry man

Draguen wrote:

Hey, in those cases, use Excel:

Take a basis value of 100 000, multiply it by 1.05 and remove 10 000: at the end of the first year you will have 95 000.

Now use the same formula but replace 100 000 by 95 000 and click and drag on excel. After 14 years you will be left with 2000 dol, after 15 years, you will have a debt of 7892 dol.

I can explain more in details if you need, but I'm on my phone for the moment

**xazbrat****Member**

Draguen wrote:

Hey, in those cases, use Excel:

Take a basis value of 100 000, multiply it by 1.05 and remove 10 000: at the end of the first year you will have 95 000.

Now use the same formula but replace 100 000 by 95 000 and click and drag on excel. After 14 years you will be left with 2000 dol, after 15 years, you will have a debt of 7892 dol.

I can explain more in details if you need, but I'm on my phone for the moment

That is not the easy way to do it--you can find calculators online to do this for a lot less effort. Look for annuity payout calculators. In this case, given 100k current value, 20 years to pay out earning at 5%, you can withdraw a bit over $8k per year before the money runs out.

http://www.calculator.net/annuity-payou … lator.html

It can be done in excel in a much easier fashion, but I can't recall how to do it right now.

Edit: remembered

For your example use =pmt(.05,20,100000,0)

*Last edited by xazbrat (February 27 2017)*

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