Question

.NEED ANSWER ASAP / ANSWER NEVER USED BEFORE, COMPLETELY NEW ANSWER PLEASE

Suppose you earned a $655,000 bonus this year and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

Select the correct answer.

a. $67,959.11

b. $67,939.61

c. $67,933.11

d. $67,946.11

e. $67,952.61

Answer 1

a)	Furure Value = Present Value * (1+rate)^number of years
	($3.50*3) =$3.5*(1+0.044)^number of years
	$10.5 =3.5*1.044^number of years
	Number of years = 25.515
	Correct Option: a
b)	We need to calculate present value of annuity
	Year	Cash Flow	PV Factor	PV Of Cash Flow
	1	9900	0.947867	$             9,383.89
	2	9900	0.898452	$             8,894.68
	3	9900	0.851614	$             8,430.98
		Present value		$           26,709.54
	Correct Option: a
c)	We need to calculate present value of annuity
	Year	Cash Flow	PV Factor	PV Of Cash Flow
	0	2200	1	$             2,200.00
	1	2200	0.947867	$             2,085.31
	2	2200	0.898452	$             1,976.60
		Present value		$             6,261.90
	Correct Option: b
d)	Monthly EMI
	= [P x R x (1+R)^N]/[(1+R)^N-1]
	Where,
	P= Amount Invested
	R= Interest rate per period
	N= Number of periods
	=$655000*0.0825*(1+0.0825)^20/(1+0.0825)^20-1
	=$67959.11
	Correct Option: a
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