Question

Your uncle has $375,000 and wants to retire. he expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. how much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

Answer 1

The formula of the present value of an annuity ordinary is
Pv=pmt [(1-(1+r)^(-n))÷r]
Pv present value 375000
PMT withdrawal amount ?
R interest rate 0.075
N time 25 years
Solve the formula for PMT
PMT=Pv ÷ [(1-(1+r)^(-n))÷r]
PMT=375,000÷((1−(1+0.075)^(
−25))÷(0.075))
=33,641.50.....answer

Answer 2

Your uncle has $375,000 and wants to retire. He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

• a. $28,843.38
• b. $30,361.46
• c. $31,959.43
• d. $33,641.50
• e. $35,323.58

Further explanation

The annuity payments are specified periodic payments that compounded to provide a target future value of sum for retirement purposes. The annuity payments is used in retirement planning by the individuals or the retirement fund managers to plan the retirement.

• PV (present value) = $375K.
• n = 25  years
• i = 7.5  %
• FV (future value) = 0.

PMT is one of the financial functions that calculates the payment for a loan based on constant payments and a constant interest rate. It use the Excel Formula Coach to figure out a monthly loan payment.

By using a financial calculator it says the PMT amount is $33,641.50.

Learn more

1. Learn more about  invested funds brainly.com/question/1431859
2. Learn more about withdraw brainly.com/question/2928487
3. Learn more about bank account brainly.com/question/2131215

Answer details

Grade:  9

Subject:  Business

Chapter:  Bank account

Keywords:  invested funds, withdraw, the account, bank, retire