Miracle Corporation Wants to Withdraw $60,000 from a Savings Account

question 42

Multiple Choice

Miracle Corporation wants to withdraw $60,000 from a savings account at the end of each year for ten years beginning one year from now. The savings earns 10% and is compounded annually. Which one of the following reflects the correct procedure to determine the required initial investment at the beginning of the first year?

• A) $60,000 times the present value of a 10-year, 10% ordinary annuity.
• B) $60,000 divided by the future value of a 10-year, 10% ordinary annuity.
• C) $60,000 times the future value of a 10-year, 10% ordinary annuity.
• D) $6,000 divided by the present value of a 10-year, 10% ordinary annuity.

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