Question: Can someone please show me how I am doing this problem wrong? My answers will be posted in CAPS. Pretend you receive an inheritance of
Can someone please show me how I am doing this problem wrong? My answers will be posted in CAPS.
Pretend you receive an inheritance of $650,000 and deposit it in a savings plan that earns 5.25% compounded monthly.
Part 1
If you want to live off the interest without withdrawing any of the $650,000 principal, what amount can you withdraw at the end of each month?
OPTIONS:
| $3,412.50 | ||
| $2,843.75 | ||
| $34,125 | ||
| $409,500 |
ANSWER: $2,843.75
Part2
How much can you withdraw at the end of each month if you want the plan to last 35 years?
OPTIONS
| $3,370.09 | ||
| $3,384.83 | ||
| $1,547.62 | ||
| $40,957.13 |
ANSWER: $20,290.07
Part 3
How much can you withdraw at the end of each month if you want the plan to last 50 years?
OPTIONS
| $3,927.08 | ||
| $1,083.33 | ||
| $3,067.21 | ||
| $2,843.75 |
ANSWER: $14,724.94
Part 4
If you withdraw $4,550 at the end of each month, how long will the plan last?
OPTIONS
| 193.86 months | ||
| 224.68 months | ||
| 142.86 months | ||
| 193.77 months |
ANSWER: 108.07 months
Part 5
If you withdraw $2,800 at the end of each month, what will the balance be in 30 years?
OPTIONS
| $3,211,224.27 | ||
| $688,141.75 | ||
| $5,570,285.83 | ||
| $2,822,792.15 |
ANSWER: $1,102,031.77
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts