Hi team,

As part of a masters course, and have some trouble answering the below, as part of my corporate finance module. Can you help clarify?

Z is 65 years old. He has accumulated savings of 1,000,000. He estimates

that he will live another 10 years and wants to spend his entire savings by then. (If

he lives longer than that, he figures his son will be happy to take care of him.)

Z places his 1,000,000 into a saving account with State Bank of Hyderabad

(now State Bank of India), earning 8 percent annually and sets it up in such a way

that he will be making 10 equal annual withdrawals (the first one occurring 1 year

from now) such that his account balance will be zero at the end of 10 years. How

much will he be able to withdraw each year?

Regards

BENJAMIN