Answer:
- starting balance: $636,215.95
- total withdrawals: $1,200,000
- interest withdrawn: $563,784.05
Step-by-step explanation:
a) If we assume the annual withdrawals are at the beginning of the year, we can use the formula for an annuity due to compute the necessary savings.
The principal P that must be invested at rate r for n annual withdrawals of amount A is ...
P = A(1+r)(1 -(1 +r)^-n)/r
P = $60,000(1.08)(1 -1.08^-20)/0.08 = $636,215.95
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b) 20 withdrawals of $60,000 each total ...
20×$60,000 = $1,200,000
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c) The excess over the amount deposited is interest:
$1,200,000 -636,215.95 = $563,784.05
