Stan has made a $125.30 monthly deposit into an account that pays 1.5% interest, compounded monthly, for 35 years. he would now like to draw a monthly salary from the account. determine the amount that stan can withdraw each month for 20 years, if he plans on not having anything in the account at the end of the 20 year period and no future deposits are made to the account.
a.
$69,242.49
b.
$69,159.05
c.
$333.29
d.
$333.71

First find the future value of annuity ordinary
Fv=125.30×(((1+0.015÷12)^(12
×35)−1)÷(0.015÷12))
=69,156.05

Then find the monthly payment Use the formula of the present value of annuity ordinary
Pmt=69,156.05÷((1−(1
+0.015÷12)^(−12×20))
÷(0.015÷12))=333.71

After that Use the formula of the future value of annuity ordinary
fv=333.71×(((1+0.015÷12)^(12
×20)−1)÷(0.015÷12))
=93,333.60

Finally find the monthly payment using the formula of the future value of annuity due
Pmt=93,333.60÷1
+0.015÷12)^(12×20)−1)
÷(0.015÷12))×(1+0.015
÷12))=333.29answer

So the answer is c