If you have $375,000 in an account earning 9% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 20 years?
A) $7,500
B) $18,750
C) $66,912
D) $5,575
E) $41,080

Question

Quizplus · Accepted Answer

This is a problem that involves calculating the annuity payment from a present value, where the present value is $375,000, the interest rate is 9% annually, and the term is 20 years. The formula for calculating the annuity payment is PV = PMT × [(1 - (1 + r)^-n) / r], where PV is the present value, PMT is the payment, r is the annual interest rate (as a decimal), and n is the number of periods. Solving for PMT with the given values, the closest answer is $41,080.

If You Have $375,000 in an Account Earning 9% Annually