Time Value of Money Calculations70
Example: An Annuity Account
You opt for an early retirement after a successful business career. You have accumulated a
savings of 400,000 that earns an average of 7% annual interest, compounded monthly. What
annuity (repetitive, uniform, withdrawal of funds) will you receive at the beginning of each
month if you wish that savings account to support you for the next 50 years?
Figure 13 Cash flow diagram (Calculate the amount)
Set to Begin mode. Press \¯ if BEGIN annunciator is not displayed.
S7DÒ
6.30 Stores interest rate.
JV\Ú
360.00 Stores the number of deposits.
É
52,975.60 Calculates the balance amount.
Table 6-11 Calculating the amount at the beginning of each month
Keys Display Description
JG\Í
12.00 Sets payments per year.
Y:::::yÏ
-400,000.00 Stores your nest egg as an
outgoing deposit.
jÒ
7.00 Stores annual interest rate you
expect to earn.
V:\Ú
600.00 Stores number of withdrawals.
:É
0.00 Stores balance of account after
50 years.
Ì
2,392.80 Calculates the amount that you
can withdraw at the beginning
of each month.
Table 6-10 Calculating the balance amount
Keys Display Description
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