You Inherit $300,000 from Your Parents and Want to Use

question 32

Multiple Choice

You inherit $300,000 from your parents and want to use the money to supplement your retirement.You receive the money on your 65th birthday,the day you retire.You want to withdraw equal amounts at the end of each of the next 20 years.What constant amount can you withdraw each month and have nothing remaining at the end of 20 years if you are earning 7% interest compounded monthly?

• A) $1,200
• B) $1,829
• C) $2,326
• D) $2,943

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Definitions:

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Maintenance

The process of preserving or keeping equipment, machinery, buildings, etc., in working order by conducting regular check-ups and repairs.

Income Effect

How an alteration in income for either a person or an economic system influences the demand levels for a certain good or service.

Price Ceiling

A legally imposed maximum price on goods or services, beyond which they cannot be sold.