Question

Find the amount necessary to fund the given withdrawals.

Yearly withdrawals of $1300 for 12 years; interest rate is 5.5%, compounded annually.
The amount necessary to fund the given withdrawals is $
(Round to the nearest cent as needed.)

Answer 1

To fund the given withdrawals, the amount necessary is $15,371.36.

Step-by-step explanation:

To find the amount necessary to fund the given withdrawals, we can use the formula for the future value of an annuity.

The formula is given by: A = P * ((1 + r)^n - 1) / r, where A is the future value, P is the annual withdrawal amount, r is the interest rate per compounding period, and n is the number of compounding periods.

Plugging in the values, we have: A = $1300 * ((1 + 0.055)^12 - 1) / 0.055

= $15,371.36.

Therefore, the amount necessary to fund the given withdrawals is $15,371.36.