John Adams plans to retire at the age of 62.He wants an annual income of $60,000 per year.He believes that he will live to be 87.He will draw the money at the beginning of each year.How much interest will he earn during his retirement years if he will average 12 percent per year on his retirement account?
A)$972,941
B)$1,029,414
C)$1,060,200
D)$994,699

Question

Quizplus · Accepted Answer

To find the total interest earned, first calculate the present value of the annuity needed to provide $60,000 per year for 25 years at a 12% interest rate. Then, subtract the total withdrawals ($60,000 * 25) from the present value to find the interest earned. The correct calculation results in $972,941.

John Adams Plans to Retire at the Age of 62