Question

Jodi is retiring at the age of 65. When she retires, she estimates that she will need a monthly income for 25 years. If Jodi starts with $328,133.32 in an account that pays 6.2% interest compounded montly, approximately what monthly income will she be able to draw?

Answer 1

Answer:The correct answer is B:2,154

Explanation:

Answer 2

Given:
Principal = 328,133.32
Interest rate = 6.2%, compounded monthly
term = 25 years

A = P (1 + r/n)^nt
A = 328,133.32 (1 + 6.2%/12)^12*25
A = 328,133.32 (1 + 0.0052)^300
A = 328,133.32 (1.0052)^300
A = 328,133.32 (4.74)
A = 1,555,351.94 Total value after 25 years.

1,555,351.94 / 300 months = 5,184.51 per month.