Suppose you inherited $275,000 and invested it at 8.25% per year.How much could you withdraw at the end of each of the next 20 years?

A) $28,532.45
B) $29,959.08
C) $31,457.03
D) $33,029.88

Question

Suppose you inherited $275,000 and invested it at 8.25% per year.How much could you withdraw at the end of each of the next 20 years?A) $28,532.45B) $29,959.08C) $31,457.03D) $33,029.88

D E L L N O V A L · Accepted Answer

Final Answer : A, Explanation :  The correct answer is A because the present value of the annuity is $275,000 and the interest rate is 8.25%. The number of periods is 20. The formula for the present value of an annuity is:PV = PMT * [1 - (1 + r)^-n] / rwhere:PV is the present valuePMT is the paymentr is the interest raten is the number of periodsSubstituting the given values into the formula, we get:$275,000 = PMT * [1 - (1 + 0.0825)^-20] / 0.0825PMT = $28,532.45Therefore, the amount that can be withdrawn at the end of each of the next 20 years is $28,532.45.

Suppose you inherited $275,000 and invested it at 8.25% per year.How much could you withdraw at the end of each of the next 20 years?

A) $28,532.45
B) $29,959.08
C) $31,457.03
D) $33,029.88

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