Answered: Find the periodic withdrawals PMT for…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 25E

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Question

Find the periodic withdrawals PMT for the given annuity account. (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.)

$300,000 at 2%, paid out monthly for 10 years

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Introduction

Periodic withdrawal refers to the fixed sum that is withdrawn on a periodic basis for a set time duration. The periodic withdrawal sum not only comprises the periodic payment but also consists of interest as well. The annuity amount is denoted as PMT. If periodic withdrawals are made at the end of the period, then the concept of an ordinary annuity is applicable. However, if the withdrawals are made at the beginning of the period, then the concept of an annuity due is applicable.

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