You have just retired with savings of $1.5 million.If you expect to live for 30 years and to earn 8% a year on your savings,how much can you afford to spend each year? Assume that you spend the money at the start of each year.
A) $112,148.50
B) $120,000.00
C) $123,371.44
D) $133,241.15

Question

Quizplus · Accepted Answer

$1,500,000 = Pmt_OA {(1 / 0.08) − [1 / 0.08(1.08)³⁰]}PMT_OA = $133,241.15PMT_AD = PMT_OA/ (1 + r)PMT_AD = $133,241.15 / 1.08PMT_AD = $123,371.44

You Have Just Retired with Savings of $1