Question

Find the amount necessary to fund the given withdrawals.Quarterly withdrawals of $650 for 6 years; interest rate is 4.5% compoundedquarterlyO $11,952.87O $3750.93O $13,604.87O $101,950.69

Answer 1

The formula for present value is:

$PresentValueofanannuityis=650\cdot\frac{1-\mleft(1+0.045/4\mright)^{-24}}{0.045/4}=13604.87$

In the formula the 0.045 / 4 represents that the 4.5% compounded quarterly, and the 24 the the number of quarters in 6 years.

The present value must be 13604.87 for quarterly withdrawals of $650 for 6 years.