I'm creating a spreadsheet and I have to figure out how much money can be withdrawn over a period of time annually.

For example, if I have $1,000,000 and have it invested somewhere that returns 3% annually, how much can I withdraw every year for 10 years?

I really don't know where to begin for finding this equation, I'm just plugging in the answers from my financial calculator. Can anyone help?

 

in excel

=PMT(0.03,10,1000000,0)

Edit: Just had to post, now I'll explain.

The formula is solving for PMT (payment)
0.03 = Rate (interest per nPer)
10 = Nper (number of times payment will be made
1000000 = Pv (present value)
0 = Fv (Future Value)

PMT will end up being red and in paranthesis, meaning it is a negative number. So, now it's a withdrawl, rather than a payment.

 

Thanks a whole bunch, man. Somehow I feel like an idiot for not researching this through Help, considering Microsoft creates some of the best Help files ever.

 

Also, might as well make this thread more useful.

Are you a fellow student or are you a working person who uses Excel extensively? I am graduating this spring with a major in Finance, though I wish I had majored in Quantitative Finance instead.. But I didn't know what I wanted to do until my senior year.

So yeah, I would love to do quantitative analysis type of stuff.

Or even doing research and creating reports and whatnot.

Unfortunately, most of the recruiters looking for finance majors at my campus are for jobs where you "sell" financial services and so on.

 

Working person who uses Excel a bit. However, the financial equations were learned mostly for my personal finances, not for work. Those financial equations are good for calculating car/home loans before going to a dealership/mortgage broker, calculating interest for savings and also for planning 401(k) deductions for retirement.

I'm no help as a guidance counselor

:ibtm2m&i:

 

They usually recruit math majors for the quantitative analysis stuff. Just throw your resume out to all the investment banks and brokerage houses....look for any financial analyst jobs...you'll learn a shit load more about excel and using databases (access or oracle) from a co.

Hands on experience > school

I have a finance degree and you can only do 3 things (using it)....accounting, selling and analysis.

I had a tough time right out of college using a lot of the stuff, they dont really prepare you for the amount of excel that is used or how many advanced queries you'll run.

 

I'm not hatin', but have you gone through your senior year of finance without using those kinds of functions in a spreadsheet?

 

that's what I was thinking. I had a class solely on Excel, then a class soley on finance using excel.

 

It depends on what schools you go to...when I went to school...circa 1999, they didnt place a big emphasize on using excel or access....I learned the hard way...

They did make us use those old financial calculators, pencils, paper, and charts.

 

That was 1999 though. This guy is still in college, seven years later.

BTW, we still had to use a financial calculator and the old way.

 

Yeah...I hate those calculators....could never find the right function...

 

Can you restate the question with all of the details provided from class? I dont' mean to step on anyone's toes here but if you use the pmt formula you will be getting the payment amount that you would have to make every year for ten years in order to pay off a million dollar loan at 3%. If your question is asking how much you can take out of an investment, which returns 3%, every year without denting the million, you need a completely different formula.