Edwin has saved $700,000 in his retirement account, which earns an annual interest rate of 6% He plans to withdraw monthly for 25 years. Approximately how much will Edwin receive each month? Use the formula P=PV⋅(r)/(1−(1+r)^−n)
Answer
A
2 dollars comma 859 point 5 6
B
29 dollars comma 856 point 3 0
C
3 dollars comma 500 point 0 0
D
4 dollars comma 510 point 1 1
Explanation
Use a monthly interest rate of 6% ÷ 12 = 0.005 and 25 × 12 = 300 monthly withdrawals. Substituting into the formula gives P = 700,000(0.005) ÷ [1 − (1.005)^−300] ≈ $4,510.11 per month. Therefore, the correct choice is $4,510.11.
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