A recent college graduate begins a savings plan at age 27 by investing $500 at the end of each month in an account that earns an annual rate of 8.1%, compounded monthly. Suppose this plan is followed for 10 years, and that sufficient equal monthly contributions are made for the next 28 years in order to be able to withdraw $10,000 at the end of each month from the account for the next 25 years. What is the total amount withdrawn? Round your answer to the nearest dollar.
A)$3,020,250
B)$3,000,000
C)$2,979,750
D)$6,020,250
E)$9,020,250

Question

A recent college graduate begins a savings plan at age 27 by investing $500 at the end of each month in an account that earns an annual rate of 8.1%, compounded monthly. Suppose this plan is followed for 10 years, and that sufficient equal monthly contributions are made for the next 28 years in order to be able to withdraw $10,000 at the end of each month from the account for the next 25 years. What is the total amount withdrawn? Round your answer to the nearest dollar. ​
A)$3,020,250
B)$3,000,000
C)$2,979,750
D)$6,020,250
E)$9,020,250

Quizplus · Accepted Answer

The total amount withdrawn is calculated by multiplying the monthly withdrawal amount by the total number of months over which withdrawals are made. Since the plan is to withdraw $10,000 at the end of each month for 25 years, the calculation is $10,000 * (25 * 12) = $10,000 * 300 = $3,000,000.

A Recent College Graduate Begins a Savings Plan at Age