Question

Richard Gorman is 65 years old and about to retire. He had 740000 saved to supplement his pension and social security and would like to withdraw it in equal annual dollar amounts so that nothing is left after 18 years. How much does he have to withdraw each year if he earns 6 percent interest in his money

Answer 1

Answer:

Given that,

Richard Gorman is 65 years old and about to retire.

He had 740000 saved to supplement his pension and social security and would like to withdraw it in equal annual dollar amounts so that nothing is left after 18 years.

Let x be the amount withdraw each year.

Rate of interest is 6%.

Total amount received after 18 years is equal to the amount withdraw each year.

we get,

$18\times x=740000\times(1+\frac{6}{100})^{18}$$x=\frac{740000}{18}\times(\frac{106}{100})^{18}$$x=\frac{740000}{18}\times(2.854)$$x=117345.054$

Amount withdraw each year is $117345.054