FV (desired bequest in today’s $): 800,000
Annual withdraw (100,000)
Time: 10 years
- Without regard to inflation and tax rate, calculate the required rate of return:
CPT–>I/Y (required return): 8.66%
- Now assume the annual withdraw 100,000 is after tax and the tax rate is 30%.
calculate BEFORE tax required of return:
Shall I gross up the annual withdraw: 100,000/(1-0.3)=
142,857 and enter it into PMT, then CPT for I/Y–>13.21% ?
Shall I gross up the required return already calculated: 8.66%/(1-0.3)=12.37% ?