Question
Donald has nothing in his retirement account. However, he plans to save $8,400.00 per year in his retirement account for each of the next 13
Donald has nothing in his retirement account. However, he plans to save $8,400.00 per year in his retirement account for each of the next 13 years. His first contribution to his retirement account is expected in 1 year. Donald expects to earn 6.30 percent per year in his retirement account. Donald plans to retire in 13 years, immediately after making his last $8,400.00 contribution to his retirement account. In retirement, Donald plans to withdraw $33,000.00 per year for as long as he can. How many payments of $33,000.00 can Donald expect to receive in retirement if he receives annual payments of $33,000.00 in retirement and his first retirement payment is received exactly 1 year after he retires?
5.62 (plus or minus 0.2 payments)
7.04 (plus or minus 0.2 payments)
6.04 (plus or minus 0.2 payments)
Donald can make an infinite number of annual withdrawals of $33,000.00 in retirement
D is not correct and neither A, B, nor C is within .02 payments of the correct answer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started