Your uncle has $300,000 invested at 7.5%, and he now wants to retire. He wants to withdraw...
Question:
Your uncle has $300,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, beginning at the end of this year. He also wants to have $25,000 left to give you when he ceases to withdraw funds from the account. What is the maximum number of $35,000 withdrawals that he can make and still have at least $25,000 left in the account?
Annuity:
An annuity will make regular payments during a specific period. Usually, investors will acquire an annuity as a part of the retirement plan due to its stability of income. In fact, an annuity will have two phases: accumulation and distribution phase. However, an investor will not necessitate an accumulation phase if an annuity is purchased by a large lump sum.
Answer and Explanation: 1
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View this answerSummary:
- Initial fund = $300,000
- Annual withdrawal = $35,000
- Lump sum = $25,000
- Annual interest rate (I) = 7.5%
In this case, the future value of...
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What is Annuity? - Definition & Formula
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Chapter 2 / Lesson 7
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Learn about annuities. Understand what an annuity is, examine the annuity formula and learn how to calculate its future value, and see examples of annuities.
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