Josh Ackerman, having saved up a nest egg of $1.5 million, retires this year and looks forward to a 30-year retirement.If his nest egg is expected to earn 9% APR and is compounded monthly, what will be his monthly income during retirement?
A)$50,000.00
B)$17,205.12
C)$14,600.45
D)$12,069.34

Question

Quizplus · Accepted Answer

To find Josh's monthly income, we use the formula for the monthly withdrawal from an annuity: PMT = P * (r(1+r)^n) / ((1+r)^n - 1), where P is the principal ($1.5 million), r is the monthly interest rate (9%/12 months = 0.0075), and n is the total number of payments (30 years * 12 months = 360). Plugging in these values, we find the monthly income is approximately $12,069.34.

Josh Ackerman, Having Saved Up a Nest Egg of $1