Jimmy has $255,906 accumulated in a 401K plan. The fund is earning a low, but safe, 3% a 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.$255,906 $30,000 = 8.5302 For PVA of $1 factor of 8.5302 and i of 3%, n = 10

Question

Quizplus · Accepted Answer

The present value of an annuity factor for 10 years at 3% interest is approximately 8.5302, which matches the given scenario. Thus, the fund will be exhausted in 10 years with annual withdrawals of $30,000.

Jimmy Has $255,906 Accumulated in a 401K Plan