hazel650
Answered

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Question 1

Upon retirement your mother received E 500, 000 lump sum. She expect to live for the next 15 years and will only depend on the retirement fund for income. Her bank offers 12% interest per annum. Advise your mother on how much she should withdraw from her bank at the end of each year for the duration of the desired life span? [10 marks]​

Sagot :

wolf1728

Answer:

You'll need to look at the attached formula.

Annual Payout = 500,000 * .12 * (1.12)^15 / [(1.12)^15  -1]

Annual Payout = 500,000 * .12 * 5.4735657593 / [ 5.4735657593 -1]

Annual Payout = 500,000 * .12 * 5.4735657593 / [4.4735657593]

Annual Payout = 60,000 * 5.4735657593 / [4.4735657593]

Annual Payout = 73,412.12

Source: http://www.1728.org/annupay.htm

That's a LOT of calculating :-)

Step-by-step explanation:

View image wolf1728
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