Your uncle has $485,000 and wants to retire.He expects to live for another 25 years,and he also expects to earn 7.5% on his invested funds.How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?
A) $40,474.12
B) $35,617.22
C) $39,259.89
D) $50,592.65
E) $47,759.46

Question

Quizplus · Accepted Answer

This is a problem that involves calculating the annuity payment given the present value, time period, and interest rate. Using the formula for the present value of an annuity, we can solve for the payment amount. Given a present value of $485,000, an interest rate of 7.5%, and a period of 25 years, the correct calculation results in an annual withdrawal of approximately $40,474.12, making option A the correct choice.

Your Uncle Has $485,000 and Wants to Retire