Question

You expect to have the given amount in an account with the given terms. Find how much you can withdraw periodically in order to make the account last the specified amount of time. Round your answer to the nearest cent.Account balance:$350,000Interest rate:4.85%FrequencyweeklyTime:27 yearsRegular withdrawal amount: $

Answer 1

Use the payout annuity formula given below:

`P_0=(d(1-(1+(r)/(k))^(-NK)))/(((r)/(k)))`

Here P0 is the account balance , here P0=$350000.

r is the rate here r=0.0485.

k is the number of compounding periods in a year.

One year has approximately 52 weeks so k=52.

N is the number of years here N=27.

d is the periodic withdrawl which needs to be calculated.

Substitute all values in the formula to get:

`\begin{gathered} 350000=(d(1-(1+(0.0485)/(52))^(-27*52)))/((0.0485)/(52)) \\ 350000=d(782.5519625) \\ d=(350000)/(782.5519625) \\ d=447.2546448\approx447.25 \end{gathered}`

So weekly withdrawl is $447.2546448 can be approximated to $447.25 to be safe.