Question

Tami would like to withdraw $10,364.10 at the end of each year, for 10 years, from an account paying 2.3% compounded annually. Determine the amount needed in the account for Tami to do this. Round to the nearest cent.

a.
$115,052.98
b.
$103,641.00
c.
$91,651.92
d.
$93,759.91

Answer 1

It is C ,my friends, C

Answer 2

Option c -$91,651.92

Explanation:

Given : Tami would like to withdraw $10,364.10 at the end of each year, for 10 years, from an account paying 2.3% compounded annually.

To find : Determine the amount needed in the account for Tami to do this.

Solution :

We apply the present value formula to get the amount,

`PV=P((1-(1+r)^(-n))/(r))`

Where, PV is the present value ,the required amount

P is the principal P=$10,364.10

r is the rate r=2.3% annually, r=0.023

n is the time n=10 years

Substitute in the formula,

`PV=10364.10((1-(1+0.023)^(-10))/(0.023))`

`PV=10364.10((1-(1.023)^(-10))/(0.023))`

`PV=10364.10((1-0.7966)/(0.023))`

`PV=10364.10((0.2034)/(0.023))`

`PV=10364.10(8.843)`

`PV=91651.915`

Therefore, The amount needed is $91651.92.

Hence, Option c is correct.