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Sammy has worked for a company with a retirement program, and today is retiring from her...

Sammy has worked for a company with a retirement program, and today is retiring from her job with the amount of $165 in her retirement account. She decides to withdrawal an equal amount from this account, once a year, beginning immediately, and ending 18 years from today (for a total of 19 payments). If the interest rate is 4.50%, solve for the annuity amount such that she uses up her full accumulation.

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Expert Solution

Present value of annuity due=(1+rate)*Annuity[1-(1+interest rate)^-time period]/rate

165=1.045*Annuity[1-(1.045)^-19]/0.045

165=Annuity*13.1599918

Annuity=165/13.1599918

=$12.54(Approx)

jeff jeffy answered 2 years ago
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