Question

8. Loren already knows that he will have $500,000 when he retires. If he sets up a payout

annuity for 30 years in an account paying 10% interest, how much could the annuity provide
each month?

Answer 1

Annuity for 30 years per month = $22846

Explanation:

The Principal = $500,000

The interest rate at 10%

The time period =30 years

So,
`Amount = prinipal (1 + (Rate)/(100))^(Time)`

Or,
`Amount = $500,000 (1 + (10)/(100))^(30)`

Or, Amount = $8724701.134

So, Compound Interest = A - P

Or, CI = $8724701.134 - $500,000 = $8224701.13

∴ Annuity for 30 years per month =
`(8224701.134)/(360)`= $22846 Answer