Problem 7-17 You have an IRA worth $250,000 and want to start to make equal, annual withdrawals (i.e., distributions from the account) for 25 years. You anticipate earning 4 percent on the funds. (To facilitate the calculation, assume an ordinary annuity.) Use Appendix D to answer the questions. Round your answers to the nearest dollar. How much can you withdraw each year?$   Since you are earning 4 percent on your investments, how much of the withdrawal consumes your investments?$   How much will be in the account at the end of the first year?$   How much do you earn on your investments in the account during the second year?$   How much will be in the account at the end of the second year?$

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
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Problem 7-17

You have an IRA worth $250,000 and want to start to make equal, annual withdrawals (i.e., distributions from the account) for 25 years. You anticipate earning 4 percent on the funds. (To facilitate the calculation, assume an ordinary annuity.) Use Appendix D to answer the questions. Round your answers to the nearest dollar.

  1. How much can you withdraw each year?
    $  

  2. Since you are earning 4 percent on your investments, how much of the withdrawal consumes your investments?
    $  

  3. How much will be in the account at the end of the first year?
    $  

  4. How much do you earn on your investments in the account during the second year?
    $  

  5. How much will be in the account at the end of the second year?
    $  

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