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Your Aunt Has $500,000 Invested at 5

question 30

Multiple Choice

Your aunt has $500,000 invested at 5.5%, and she now wants to retire.She wants to withdraw $45,000 at the beginning of each year, beginning immediately.When she makes her last withdrawal (at the beginning of a year) , she also wants to have enough left in the account so that you can make a final withdrawal of $50,000 at the end of that year (her last withdrawal is at the beginning of the year, your withdrawal is at the end of that same year) .What is the maximum number of $45,000 withdrawals that she can make and still have enough in the account so that you can make a $50,000 withdrawal at the end of the year of her last withdrawal? (Hint: If your solution for N is not an integer, round down to the nearest whole number.)

Definitions:

Normal Balance

The side (debit or credit) of an account that is increased, reflecting the account's natural balance.

Asset Account

An account that records the value of assets owned by a company, such as cash, inventory, and equipment.

Financial Statement

A record that details the financial activities and conditions of a business or individual, commonly including the balance sheet, income statement, and cash flow statement.

Financial Statement

Formal records of the financial activities and position of a business, individual, or other entity, typically including the income statement, balance sheet, and statement of cash flows.