A depositor puts $30,000 in a savings account that pays 4% interest, compounded quarterly. Equal annual...

A depositor puts $30,000 in a savings account that pays 4% interest, compounded quarterly. Equal annual withdrawals are to be made from the account, beginning one year from now and continuing forever. What is the maximum annual withdrawal?

Expert Solution

Interest rate, i = 4%/4 = 1%

A = 1%*(30,000) = 300

So, maximum annual withdrawal = 300(F/A, 1%, 4) = $1,218.12

Rahul Sunny answered 2 years ago

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