Calculate How Long Funds Will Last

[ridgerunner]

I am not very good with financial worksheet functions and hope that someone
here can help. Is there a function that will return how long funds will last
if you earn a static interest rate and withdraw a static amount of money that
is more than the interest earned? Let's say, for example, the amount of
money is $1,000,000, the interest rate is 4% and the yearly withdrawal is
$50,000?

 

[Don Guillett]

homework?

 

[Ron Rosenfeld]

I am not very good with financial worksheet functions and hope that someone
here can help. Is there a function that will return how long funds will last
if you earn a static interest rate and withdraw a static amount of money that
is more than the interest earned? Let's say, for example, the amount of
money is $1,000,000, the interest rate is 4% and the yearly withdrawal is
$50,000?

Take a look at the NPER worksheet function.
--ron

 

[Chip Pearson]

The NPER (number of periods) function will do this for you. E.g.,

=NPER(Rate,Payment,PresVal,FutureVal,Type)

where Rate is the annual interest rate = 0.04, Payment is annual
withdrawl = -50,000, FutureVal ending value = 0, Type indicates
whether withdraw is at end or begining of period (0 or 1).

In your example, you'll exhaust the principle in 37.38 years.

Cordially,
Chip Pearson
Microsoft MVP 1998 - 2010
Pearson Software Consulting, LLC
www.cpearson.com
[email on web site]

 

[OssieMac]

Lookup NPER function in help. Note that in the formula the interest is
entered as its real decimal value. eg. 4% is 0.04 (or 4/100) and regular
withdrawals is a negative amount eg. -50000.

 

[ridgerunner]

Thank you for the great explanation of the formula. That really helps me
know how to construct it properly. My husband and I are retired and are
trying to determine how not to run out of money.

The NPER (number of periods) function will do this for you. E.g.,

=NPER(Rate,Payment,PresVal,FutureVal,Type)

where Rate is the annual interest rate = 0.04, Payment is annual
withdrawl = -50,000, FutureVal ending value = 0, Type indicates
whether withdraw is at end or begining of period (0 or 1).

In your example, you'll exhaust the principle in 37.38 years.

Cordially,
Chip Pearson
Microsoft MVP 1998 - 2010
Pearson Software Consulting, LLC
www.cpearson.com
[email on web site]

I am not very good with financial worksheet functions and hope that someone
here can help. Is there a function that will return how long funds will last
if you earn a static interest rate and withdraw a static amount of money that
is more than the interest earned? Let's say, for example, the amount of
money is $1,000,000, the interest rate is 4% and the yearly withdrawal is
$50,000?

.

 

[ridgerunner]

Thank you for the clarification. Sometimes these formulas are so cryptic (to
me any way), I have trouble with them; even when trying to use help.