Dan Morgan inherits $900,000. He plans to take out an equal sum over the next 25 years, while his funds earn 9%. How much can she take out at the end of each year?


I took the 900000/9.823 from the PVA IFA chart and it doesnt seem correct. It came out to roughly 91,000

To calculate the amount that Dan Morgan can take out at the end of each year over the next 25 years, you need to use the formula for the present value of an annuity. The formula for the present value of an annuity is

PVA = C * (1 - (1 + r)^(-n)) / r

Where:
PVA = Present Value of the Annuity
C = Cash flow per period (amount to be taken out each year)
r = Interest rate per period
n = Number of periods

In this case, Dan Morgan plans to take out an equal amount each year for 25 years, and the funds are earning 9% interest. The present value (PVA) is given as $900,000.

Plugging in the values into the formula, we get:

$900,000 = C * (1 - (1 + 0.09)^(-25)) / 0.09

We can now solve for C:

C = ($900,000 * 0.09) / (1 - (1.09)^(-25))
C ≈ $70,390.27

Therefore, Dan Morgan can take out approximately $70,390.27 at the end of each year for the next 25 years while earning a 9% interest rate.