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?

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 Link

tifanihayyu tifanihayyu · Answer 2 · 2019-09-12T23:59:24+02:00

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

Learn more about invested funds https://brainly.com/question/1431859
Learn more about withdraw https://brainly.com/question/2928487
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Answer details

Grade: 9

Subject: Business

Chapter: Bank account

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