Suppose you inherited $275,000 and invested it at 8.25% per year.How much could you withdraw at the end of each of the next 20 years?
A)$28,532.45
B)$29,959.08
C)$31,457.03
D)$33,029.88

Question

Quizplus · Accepted Answer

The correct answer is A because the present value of the annuity is $275,000 and the interest rate is 8.25%. The number of periods is 20. The formula for the present value of an annuity is:PV = PMT * [1 - (1 + r)^-n] / rwhere:PV is the present valuePMT is the paymentr is the interest raten is the number of periodsSubstituting the given values into the formula, we get:$275,000 = PMT * [1 - (1 + 0.0825)^-20] / 0.0825PMT = $28,532.45Therefore, the amount that can be withdrawn at the end of each of the next 20 years is $28,532.45.

Suppose You Inherited $275,000 and Invested It at 8