Your uncle just won the weekly lottery, receiving $375,000, which he invested at a 7.5% annual rate. He now has decided to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. What is the maximum number of whole payments that can be withdrawn before the account is exhausted, i. e., before the account balance would become negative

Question

Isai Randolph

Business

26 July, 02:48

Your uncle just won the weekly lottery, receiving $375,000, which he invested at a 7.5% annual rate. He now has decided to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. What is the maximum number of whole payments that can be withdrawn before the account is exhausted, i. e., before the account balance would become negative

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Answers (1)

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Angel Farmer · Answer 1

22

Explanation:

Calculation for the maximum number of whole payments that can be withdrawn before the account is exhausted

Using financial calculator

PV - 375000

PMT 35000

I 7.50%

FV 0

Compute N

= 22.50

Approximately 22

Hence, maximum number of whole payment will be 22