Your Aunt Elsa Has $500,000 Invested at 6

question 45

Multiple Choice

Your Aunt Elsa has $500,000 invested at 6.5%, and she plans to retire.She wants to withdraw $40,000 at the beginning of each year, starting immediately.What is the maximum number of whole payments that can be withdrawn before the account is exhausted, i.e., before the account balance would become negative? (Hint: Round down to the nearest whole number.)

• A) 18
• B) 19
• C) 20
• D) 21
• E) 22

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Definitions:

Shunt

A low-resistance connection between two points in an electric circuit that forms an alternative path for a portion of the current.

Compound Motor

A motor that contains both series and shunt field windings.

Cumulative

Increasing or grown by accumulation or successive additions.

Differential

Relating to or involving a difference; typically referring to circuits or components that measure or react to the difference between two quantities.