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27 November, 10:13

Your uncle has $375,000 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?

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  1. 27 November, 13:52
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    The formula of the present value of an annuity ordinary is

    Pv=pmt [ (1 - (1+r) ^ (-n)) : r]

    Pv present value 375000

    PMT withdrawal amount?

    R interest rate 0.075

    N time 25 years

    Solve the formula for PMT

    PMT=Pv : [ (1 - (1+r) ^ (-n)) : r]

    PMT=375,000: ((1 - (1+0.075) ^ (

    -25)) : (0.075))

    =33,641.50 ... answer
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