Bank
Withdrawal  regular withdrawals from an investment
This
article develops a script in Matlab to calculate bank withdrawals,
i.e., the
maximum
amount which may be withdrawn regularly from an investment over a
specified
time period.
All withdrawals are assumed to be equal. You
must provide the
amount of the initial investment, the nominal interest rate, the number
or
withdrawals per year and the number of years.
The
maximum amount of withdrawals is calculated by the following formula
where:
R = amount of regular withdrawal
P = initial investment
i = nominal interest rate
N = number of withdrawals per year
Y = number or years
Because
this program calculates a maximum amount, a balance of $0.00 will be
left in
your account at the end of the time period. You may withdraw any lesser
amount
under the same conditions and leave a remaining balance in your account.
This is
our Matlab function or script to calculate the above formula:
function r =
bank_withdrawal(p, it, n, y)
it =
it/(n*100);
r =
p*(it/((1 + it)^(n*y)  1) + it);
We can create another
script to test and run the above
mfile:
clc;
clear; format bank
p =
input('Enter
initial investment: ');
it =
input('Enter
nominal interest rate: ');
n =
input('Enter
number of withdrawals per year: ');
y =
input('Enter
number of years: ');
amount_of_bank_withdrawal
= bank_withdrawal(p, it, n, y)
Example:
Joe
invests $8000 at 9.5%. He plans to make regular withdrawals every month
for ten
years, leaving nothing at the end. Ho much should he withdraw each time?
We run
our test code and get:
Enter
initial investment: 8000
Enter
nominal interest rate: 9.5
Enter
number of withdrawals per year: 12
Enter
number of years: 10
The
result is:
amount_of_bank_withdrawal
= 103.52
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