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?

Solutions

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 1 year ago

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