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26 June, 13:35

Prof. Finance will have $1,500,000 saved up by retirement at age 65. The retired professor expects to live 25 more years after retiring. How large of an annual annuity withdrawal can Prof. Finance make at the beginning of each year under this scenario from an account paying 6% compounded annually?

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  1. 26 June, 16:50
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    He can makes an annual annuity withdrawal of $ 110,698

    Explanation:

    Prof. Finance has a PV of 1,500,000, which is the ammount after his retirement at age 65 so PV = 1,500,000

    6% in this case is the rate of interest so r=6%

    number of withdrawals = 25

    PMT = $110,698
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