David has a bank account which pays interest at the rate of 1.5% per year, compounded annually. Determine what amount David must have in the bank, given that he would like to draw an annual salary of $32,635.15 from his account at the end of each year for 30 years. Round to the nearest cent.

Because each withdrawal is made at the end of the year, this is the present value of an ordinary annuity. Use PV = PMT × [1 − (1 + i)^−n] ÷ i, with PMT = $32,635.15, i = 0.015, and n = 30. This gives a present value of about $783,760.48, so David must have $783,760.48 in the bank. That is choice A.

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