How Much Is Needed in an Account That Earns an Annual

question 28

Multiple Choice

How much is needed in an account that earns an annual rate of 8.4% compounded monthly in order to withdraw $1,200 at the end of each month for 22 years? Round your answer to the nearest cent. ​

• A)$103,164.36
• B)$156,715.29
• C)$151,429.66
• D)$144,245.22
• E)$134,479.83

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Definitions:

Borrowing Rate

The interest rate or cost that a borrower pays to secure funds from a lender.

Expected Value

The calculated average result of all possible outcomes of a particular investment or decision, considering both the probability and the impact of each outcome.

Risky Portfolio

An investment portfolio that contains assets with a higher degree of volatility and potential for loss, aiming for higher returns.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points.