Present and future value tables of $1 at 3% are presented below:

-Jimmy has $255,906 accumulated in a 401K plan. The fund is earning a low, but safe, 3% per year. The withdrawals will take place at the end of each year starting a year from now. How soon will the fund be exhausted if Jimmy withdraws $30,000 each year?
A) 11 years.
B) 10 years.
C) 8.5 years.
D) 8.8 years.

Question

Present and future value tables of $1 at 3% are presented below:

-Jimmy has $255,906 accumulated in a 401K plan. The fund is earning a low, but safe, 3% per year. The withdrawals will take place at the end of each year starting a year from now. How soon will the fund be exhausted if Jimmy withdraws $30,000 each year?
A) 11 years. 
B) 10 years. 
C) 8.5 years. 
D) 8.8 years.

Quizplus · Accepted Answer

$255,906 ÷ $30,000 = 8.5302
For PVA of $1 factor of 8.5302 and i of 3%, n = 10

Present and Future Value Tables of $1 at 3% Are