Annie Laerz wants to invest $20,000 on January 1, 2014, so that she may withdraw 10 annual payments of equal amounts beginning January 1, 2029. If the fund earns 6% annual interest over its life, what will be the amount of each of the withdrawals? (Use spreadsheet software or a financial calculator to calculate your answer. Round intermediary calculations two decimal places and round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

To find the amount of each withdrawal, we first need to calculate the future value of the investment at the end of 15 years (from 2014 to 2029) using the formula for compound interest: FV = PV * (1 + r)^n. Then, we use the annuity formula to find the equal annual withdrawals over 10 years. The correct calculation results in approximately $6,144 per year.

Annie Laerz Wants to Invest $20,000 on January 1, 2014