Answer:
withdraw = 28532.45
so correct option is a. $28,532
Explanation:
given data
earned = $275,000 bonus
interest rate = 8.25% per year
time = 20 year
to find out
How much could you withdraw at the end of each of the next 20 years
solution
first we find here Cumulative discount factor that is express as
Cumulative discount factor = [tex]\frac{(1-(1+r)^{-t}}{r}[/tex] .............1
put here value r is rate and t is time
Cumulative discount factor = [tex]\frac{(1-(1+0.0825)^{-20}}{0.0825}[/tex]
Cumulative discount factor = 9.638148
so here
withdraw = Present amount ÷ cumulative discount factor .......2
put here value we get
withdraw = [tex]\frac{275000}{9.638148}[/tex]
withdraw = 28532.45
so correct option is a. $28,532
