uncle has $300,000 invested at 7.5%, and he now wants to retire.He wants to withdraw $35,000 at the end of each year, beginning at the end of this year.He also wants to have $25,000 left to give you when he ceases to withdraw funds from the account.What is the maximum number of $35,000 withdrawals that he can make and still have at least $25,000 left in the account? (Hint: If your solution for N is not an integer, round down to the nearest whole number.)

Question

Quizplus · Accepted Answer

The correct answer is B.The uncle can make 13 withdrawals of $35,000 each and still have at least $25,000 left in the account.The total amount of money that the uncle can withdraw is $300,000 - $25,000 = $275,000.The amount of money that the uncle will withdraw each year is $35,000.The number of years that the uncle can withdraw money is $275,000 / $35,000 = 7.857142857142857.Since the uncle can't withdraw a fraction of a year, he can only withdraw for 7 years.Therefore, the uncle can make 13 withdrawals of $35,000 each and still have at least $25,000 left in the account.

Uncle Has $300,000 Invested at 7