Question

Tami would like to withdraw $10,364.10 at the end of each year, for 10 years, from an account paying 2.3% compounded annually. Determine the amount needed in the account for Tami to do this. Round to the nearest cent.
a.
$115,052.98
b.
$103,641.00
c.
$91,651.92
d.
$93,759.91

Answer 1

It is C ,my friends, C

Answer 2

Answer:

Option c -$91,651.92

Step-by-step explanation:

Given : Tami would like to withdraw $10,364.10 at the end of each year, for 10 years, from an account paying 2.3% compounded annually.

To find : Determine the amount needed in the account for Tami to do this.    

Solution :

We apply the present value formula to get the amount,

$PV=P(\frac{1-(1+r)^{-n}}{r})$      

Where, PV is the present value ,the required amount

P is the principal P=$10,364.10

r is the rate r=2.3% annually, r=0.023

n is the time n=10 years

Substitute in the formula,

$PV=10364.10(\frac{1-(1+0.023)^{-10}}{0.023})$    

$PV=10364.10(\frac{1-(1.023)^{-10}}{0.023})$    

$PV=10364.10(\frac{1-0.7966}{0.023})$    

$PV=10364.10(\frac{0.2034}{0.023})$    

$PV=10364.10(8.843)$      

$PV=91651.915$      

Therefore, The amount needed is $91651.92.

Hence, Option c is correct.