Question

When abby reaches age of 55, she will deposit $50,000 to fund an annuity with the Dallas cowboys insurance company. The money will be invested at 8% each year, compounded semiannually. She is ro draw payments until she reaches age 65. What is the amount of each payment?

Answer 1

The Amount draw from the account after 10 years is $109,555 .

Explanation:

Given as :

The principal deposited in account = p = $50,000

The rate of interest = 8% semiannually

The time period for the amount will be in account = t = 10 years

Let The Amount draw from the account after 10 years = $A

Now, From Compound Interest method

Amount = principal ×
`(1+(\texrm rate)/(2* 100))^(\textrm 2* time)`

A = p ×
`(1+(\texrm r)/(2* 100))^(\textrm 2* t)`

Or, A = $50,000 ×
`(1+(\texrm 8)/(2* 100))^(\textrm 2* 10)`

Or, A = $50,000 ×
`(1.04)^(20)`

Or, A = $50,000 × 2.1911

Or, A = $109,555

So, The Amount draw from the account after 10 years = A = $109,555

Hence,The Amount draw from the account after 10 years is $109,555 . Answer