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A retirement plan guarantees to pay to you or your estate a fixed amount for 20 years. At the time of retirement, you will have $73,425. The plan anticipates earning 8% interest. Given the following information, how much will you be able to take out on an annual basis while you are retired?
$1,435$13,070$7,479$13,102

Respuesta :

Answer:

P = $ 7479

Explanation:

Given:

Number of years, n = 20 years

Value at retirement, Pv = $73,425

Rate of interest, r = 8%

Now, the formula for annuity is given as:

[tex]P=r\times (\frac{P_V}{1-(1+r)^{-n}})[/tex]

where,

P is the annuity that can be withdrawn every year

Pv = Present value i.e the value at retirement

on putting the values, we have

[tex]P=(0.08)\times (\frac{73425}{1-(1+(0.08))^{-20}})[/tex]

or

P = $ 7478.49 ≈ $ 7479

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