Answer:
Option c -$91,651.92
Step-by-step explanation:
Given : Tami would like to withdraw $10,364.10 at the end of each year, for 10 years, from an account paying 2.3% compounded annually.
To find : Determine the amount needed in the account for Tami to do this.
Solution :
We apply the present value formula to get the amount,
[tex]PV=P(\frac{1-(1+r)^{-n}}{r})[/tex]
Where, PV is the present value ,the required amount
P is the principal P=$10,364.10
r is the rate r=2.3% annually, r=0.023
n is the time n=10 years
Substitute in the formula,
[tex]PV=10364.10(\frac{1-(1+0.023)^{-10}}{0.023})[/tex]
[tex]PV=10364.10(\frac{1-(1.023)^{-10}}{0.023})[/tex]
[tex]PV=10364.10(\frac{1-0.7966}{0.023})[/tex]
[tex]PV=10364.10(\frac{0.2034}{0.023})[/tex]
[tex]PV=10364.10(8.843)[/tex]
[tex]PV=91651.915[/tex]
Therefore, The amount needed is $91651.92.
Hence, Option c is correct.
