PV: 1,000,000

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% ?

OR

Shall I gross up the required return already calculated: 8.66%/(1-0.3)=12.37% ?