I have a lump sum amount (L), specified number of years (n) and an interest rate (i). How do I calculate what is the annual withdrawl that draws down the account to zero?
i.e.
Lump Sum 60K, 3 years, interest rate 4%
(A) BOY Balance Year 1 = 60K (L) - withdrawl (W)
EOY Balance Year 1 = A * i
BOY Year 2 = (A* i) - W
EOY Balance Year 2 = ((A * i) - W) * i
BOY Year 3 = 0 [...since the account will have drawn its last withdrawl]
But the iteration is dependent on the number of years. So 3 years equals an equal annual withdrawl of approximately 20,789.34. However 4 years would yield a smaller number.
I can't seem to calculate what the equal annual withdrawl would be within excel since it obviously requires an iterative calculation to sum zero in the final year.
Thanks in advance.
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