Find the periodic withdrawals for the annuity $105,000 at 5% paid out monthly for 23 years. (Assume end of period deposits and compounding at the...

We have a present value of $105,000 in an account bearing 5% annual interest. We wish to determine the monthly amount we can withdraw so that the account balance hits zero in 23 years:

Use the formula "PMT"="PV"*i/((1-(1+i)^(-n))) 

where PMT is the monthly payment, PV is the present value, i=r/m is the interest rate per compounding period (r is the annual interest rate and m the number of compounding periods per year), and n=mt is the number of compounding periods (where m is the number of compounding periods per year and t is the number of years.)

Substituting the known values we get:

"PMT"=105000*(.05/12)/(1-(1+.05/12)^(12(-23))) 

~~640.93 

The monthly payouts will be approximately $640.93