Now William knows that he will have 577,000 in his inheritance...

Now William knows that he will have 577,000 in his inheritance fund, when he will reach age sixty. He would like to know how much he could withdraw from the fund in equal installments at the end of each year from the year he reaches age 60 until he reaches age 70½, the year he must start withdrawing funds from his individual retirement account (IRA). William assumes the funds will continue to earn at a 9.71 percent annual rate. In other words, William would like to know the annual year-end payment from an eleven-year annuity (from age 60 to the year he will be 70½), earning 9.71 percent annually on a principal sum of $577,000.

Round the answer to two decimal places.

Answer & Explanation
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The annual year end payment for an 11 year annuity is Future Value (FV) of the Growing Ordinary Annuity
$ 1,599,131.50. 

Step-by-step explanation


Present Value= 577,000

Period= 11

Rate per period= 9.71



C×[ i+(1+i^n - 1)]/n



i= rate

n= period
=577,000 x [ 9.71%+ (1+9.71%^11 - 1)] /11
=577,000 x 2.77145840555

= $ 1,599,131.50



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