Suppose you inherited $200,000 and invested it at 6% per year. How much could you withdraw at the end of each of the next 15 years?
a) $24,764.40
b) $23,431.83
c) $20,592.55
d) $17,843.15
e) $15,119.76
Does the question ask how much you can withdraw in order to maintain $200,000 yearly? If so then the way I see getting to the solution is first finding out the interest paid in the first year = $12,000 plus the interest that is compounded and paid at the end of the next year:
$212,000 * .06 = $12720
So, $12000 + $12720 = $24720
That still doesn't equal any of my choices. Any advice here? Thanks in advance.
Flora
a) $24,764.40
b) $23,431.83
c) $20,592.55
d) $17,843.15
e) $15,119.76
Does the question ask how much you can withdraw in order to maintain $200,000 yearly? If so then the way I see getting to the solution is first finding out the interest paid in the first year = $12,000 plus the interest that is compounded and paid at the end of the next year:
$212,000 * .06 = $12720
So, $12000 + $12720 = $24720
That still doesn't equal any of my choices. Any advice here? Thanks in advance.
Flora