Question

If you put up $41,000 today in exchange for a 5.1 percent, 15-year annuity, what will the annual cash flow be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32 .16.) Annual cash flow _______.

Answer 1

Annual withdraw= $3,976.78

Step-by-step explanation:

Giving the following information:

PV= $41,000

Interest rate= 5.1% = 0.051

Number of periods= 15 years

To calculate the annual cash-flow, we need to use the following formula:

Annual withdraw= (PV*i) / [1 - (1+i)^(-n)]

Annual withdraw= (41,000*0.051) / [1 - (1.051^-15)]

Annual withdraw= $3,976.78