Your uncle has $320,000 invested at 7.5%, and he now wants to retire. He wants...

Your uncle has $320,000 invested at 7.5%, and he now wants to retire. He wants to withdraw $35,000 at the end of each year, starting at the end of this year. He also wants to have $25,000 left to give you when he ceases to withdraw funds from the account. For how many years can he make the $35,000 withdrawals and still have $25,000 left in the end?

a.	12 years
b.	16 years
c.	15 years
d.	17 years
e.	19 years

Expert Solution

Present Value of amount Invested = $320,000

Periodic Withdrawal at the end of each year = $35,000

Future Value to left to give you when he ceases to withdraw funds = $25,000

Calculating the number of years he can make the withdrawal and still have future left using Excel "NPER" function:-

So, the number of years he can make the withdrawal and still have future left is 16.73 years

Option D. 17 years(rounding off the decimal to nearest year)

If you need any clarification, you can ask in comments.

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jeff jeffy answered 2 years ago

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