Question

An ordinary annuity that earns 7.4% compounded monthly has a current balance of $300,000. The owner of the account is about to retire and has to decide how much to withdraw from the account each month. Find the number of withdrawals under each of the following options. (A) $4000 monthly (B) $3000 monthly (C) $2000 monthly

Answer 1

Given. present value, PV = $300,000 Rate de interest pa paliod, 74.). is 0.00GIGGG7 it quovo monthly using the present value formula : Pre Pmi (1-litin 300,000 = 40001-cito.00616)="? 0.00616 1-(1+0.00616;" = 0.462 (1+0.0061630M = 0.528 en In Clto-OOGIG) Elrico-538) alint-n= -0.61989 s n=100.94. C. 00GIULI number do withdrawals icin=1011 B) $3000 monthly : PV = PMI (1-citis) 300,000 = 3030 (1-(170.00616)"} 0.00616 ) 1- (1.0061637 .GIE .:-) ( 100616)"? = 0.384 >> -nin (1.00616) = In Co-334) -) :n ..0: :-0.9571127 -995412 155.85 0.0061411 number do withdrawals ia n = 156] 156 A

Oo c) $2000 monthly P= PMT (1=(1475 300,000 - 2000.1.1-C1O.CO6165? 0.00616 3) HCl+0.00616)- 0.924 -> (100616. ^ - 0.076 ... ). -n In (1.00616) = (0.076) no 2577022 O.COGIQUE 419.630.420 no. do coithdrawals ia nz 420)