Answer:
withdraw amount = 28532.45
so correct option is a. $28,532
Explanation:
given data
present amount = $275,000 bonus
interest rate = 8.25% per year = 0.0825
time period = 20 year
solution
first we get here Cumulative discount factor that is
Cumulative discount factor = [tex]\frac{(1-(1+r)^{-t}}{r}[/tex] .........................1
here r is rate and t is time period
put here value and we will get
Cumulative discount factor = [tex]\frac{(1-(1+0.0825)^{-20}}{0.0825}[/tex]
solve it we get
Cumulative discount factor = 9.638148
and now we get so here withdraw amount at the end of each of the next 20 years that is
withdraw amount = Present amount ÷ cumulative discount factor ............2
put here value
withdraw amount = [tex]\frac{275000}{9.638148}[/tex]
solve it we get
withdraw amount = 28532.45
so correct option is a. $28,532
