Question

Determine the amount needed such that when it comes time for retirement, an individual can make semiannual withdrawals in the amount of $15,265 for 35 years from an account paying 4.5% compounded semiannually. Round your answer to the nearest cent. a. $938,272.00 b. $941,790.00 c. $535,528.03 d. $547,577.41 Please select the best answer from the choices provided A B C D

Answer 1

C on edg

Step-by-step explanation:

Answer 2

$535,528.03

Step-by-step explanation:

Since semiannual withdrawals are to be made for 35 years, that is an annuity with 2 payments per year.

You can use a financial calculator to find the amount that when you retire, will be equal to the present value of the annuity withdrawals. The inputs are as follows;

Total duration; N = 35*2 = 70 semi annual withdrawals

Semi-annual interest rate; I/Y = 4.5% /2 = 2.25%

Future value; FV = 0 (use 0 in annuity if not given)

Semi annual Payment; PMT = 15,265

To find PV, key in the functions; CPT PV = 535,528.026

Therefore, the individual will need to have $535,528.03