The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. Mackie's individual retirement account IRA currently has a balance of $100,000 and is earning 6%. Beginning one year from today, what equal annual amounts can be withdrawn from the IRA for 10 years so that the balance after the tenth withdrawal is zero?
A) $14,237
B) $13,587
C) $12,950
D) $10,000

Question

Quizplus · Accepted Answer

The problem involves calculating the annuity payment using the present value of an annuity formula. With a present value of $100,000, an interest rate of 6%, and a period of 10 years, the correct annual withdrawal amount is $13,587.

The Solution to This Problem Requires Time Value of Money