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Finance - Investments Sub-forum: Non-Actuarial Personal Finance/Investing

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  #1  
Old 03-11-2014, 10:18 PM
Logarithum Logarithum is offline
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Default how long will the fund last?

I have this question says $10000 is in fund which is accumulating at 5% per annum convertible continuously. If the money continually withdrawn at the rate of $2000 per annum, how long will the fund last?

I tried to approach the question by setting:

10000 e^0.05 = 2000 (0.05/ln(1.05)) S_angle(n,5%)

I got the answer of 4.68 years.

I thought I can post my work here so I can receive some feedback. Thanks
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Old 03-11-2014, 10:24 PM
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How does an answer less than 5 years even make sense?
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Old 03-11-2014, 10:39 PM
Logarithum Logarithum is offline
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Quote:
Originally Posted by Dismal Science View Post
How does an answer less than 5 years even make sense?
That's true. I tried to make both FV equal and then solve for n. Probably I'm using the wrong interest rate in S_angle(n,5%)?
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Old 03-11-2014, 10:56 PM
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Gandalf Gandalf is offline
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For FV, did you mean 10000 e^0.05n
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Old 03-11-2014, 11:10 PM
Logarithum Logarithum is offline
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Quote:
Originally Posted by Gandalf View Post
For FV, did you mean 10000 e^0.05n
Probably this is what I missed. Because the current setup of the LHS is the continuous compounding for the first year only

Last edited by Logarithum; 03-12-2014 at 12:13 AM..
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