You were left $100,000 in a trust fund set up by your grandfather.The fund pays 6.5% interest.You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately.How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account?
A) $24,736
B) $26,038
C) $27,409
D) $28,779
E) $30,218

Question

Quizplus · Accepted Answer

The problem involves calculating the annuity payment for a present value of $100,000 at an interest rate of 6.5% over 4 periods. Using the formula for the present value of an annuity, the correct withdrawal amount is $27,409.

You Were Left $100,000 in a Trust Fund Set Up