Question

End of each of the next 20

Suppose you earned a $555,000 bonus this year and invested it at 8.25% per year. How much could you withdraw

years?

Select the correct answer.






a. $57,592.18

b. $57,500.68

c. $57,575.18

d. $57,609.18

e. $57,583.68

Answer 1

Annual withdraw= $57,583.68

Explanation:

Giving the following information:

Present Value (PV)= $555,000

Interest rate (i)= 0.0825

Number of periods (n)= 20

To calculate the annual withdrawals, we need to use the following formula:

Annual withdraw= (PV*i) / [1 - (1+i)^(-n)]

Annual withdraw= (555,000*0.0825) / [1 - (1.0825^-20)]

Annual withdraw= $57,583.68