Question

Approximately how much should be accumulated by the beginning of retirement to provide a $4,000 monthly check that will last for 15 years, during which time the fund will earn 8% interest with monthly compounding? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

• $648,000.00

• $662,400.00

• $385,077.38

• $418,562.37

Answer 1

- Periodic monthly retirement annuity for 15 years = $4000

Calculating the Present Value that should be accumulated by the beginning of retirement to support 15 years of monthly withdrawal:-

Where, C= Periodic Payments = $4,000

r = Periodic Interest rate = 8%/12 = 0.6666%

n= no of periods = 15 years*12 = 180

Present Value = $418,562.37

So, amount to be accumulated at the beginning of retirement is $418,562.37

Option 4

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