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
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
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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
Expert Solution
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Periodic withdrawal refers to the fixed sum that is withdrawn on a periodic basis for a set time duration.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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