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9. You want to be able to withdraw the specified amount periodically from a payout annuity with the given terms. Find how much the account needs to hold to make this possible. Round your answer to the nearest dollar. Regular withdrawal: $4500 Interest rate: 4.5% Frequency quarterly Time: 24 years Account balance: $

9 You Want To Be Able To Withdraw The Specified Amount Periodically From A Payout Annuity With The Given Terms Find How Much The Account Needs To Hold To Make T class=

Sagot :

This is a question on Future Value of Annuity. There is a present sum from which withdrawals will be made. We therefore employ the formulae thus:

[tex]PVA=\text{PMT(}\frac{1-(1+\frac{i}{m})^{-mn}}{\frac{i}{m}}\text{)}[/tex]

Where:

PVA = Present Value of Annuity

PMT = Periodic sum

i = Interest Rate

n = Number of interest periods

m = Compunding frequency

Substituting, we have:

[tex]\begin{gathered} P\text{VA}=4500(\frac{1-(1+\frac{0.045}{4})^{-(4\times24)}}{\frac{0.045}{4}}) \\ P\text{VA}=263,340 \end{gathered}[/tex]

PVA = $263,340

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