Your aunt wants to retire and has $375,000.She expects to live for another 25 years, and she also expects to earn 7.5% on her invested funds.How much could she withdraw at the beginning of each of the next 25 years and end up with zero in the account?
A) $28,243.21
B) $29,729.70
C) $31,294.42
D) $32,859.14
E) $34,502.10

Question

Quizplus · Accepted Answer

To find the annual withdrawal amount, we use the formula for the annuity withdrawal: PMT = PV * [r / (1 - (1 + r)^-n)], where PV = $375,000, r = 7.5% or 0.075, and n = 25 years. Solving this gives approximately $31,294.42.

Your Aunt Wants to Retire and Has $375,000