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QuizMultiple Choice

Planning Retirement — Quiz

Question 1 • Financial Math

Moishy has $750,000 in his 401(k) and expects an annual interest rate of 6% If he plans to withdraw monthly for 20 years during retirement, how much can he expect to receive per month? Use the formula P=P⁢V⋅(r)/(1−(1+r)^−n)

Answer
A
6 dollars comma 200 point 7 5
B
2 dollars comma 879 point 9 7
C
5 dollars comma 373 point 2 3
D
3 dollars comma 750 point 0 0

Explanation

Use the monthly interest rate and number of monthly withdrawals: r = 0.06 ÷ 12 = 0.005 and n = 20 × 12 = 240. Substituting into the formula gives P = 750,000(0.005) ÷ [1 − (1.005)^−240] ≈ $5,373.23 per month. Therefore, the correct choice is $5,373.23.

AI-written and checked against the verified answer.

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