You have \( \$ 300,000 \) saved for retirement. Your account earns \( 2 \% \) interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 25 years? Round your answer to the nearest dollar. Check Answer \( \$ \)

We can use the formula for the present value of an annuity. The formula is:   P = W × [1 – (1 + r)^(–n)] / r where   P = present value (in this case, $300,000),   W = monthly withdrawal amount,   r = monthly interest rate, and   n = total number of withdrawals (months). Step 1. Find the monthly interest rate:   Annual rate = 2% = 0.02   Monthly rate, r = 0.02 ÷ 12 ≈ 0.001667 Step 2. Convert the withdrawal period from years to months:   25 years × 12 = 300 months Step 3. Solve the annuity formula for W:   W = P × r / [1 – (1 + r)^(–n)] Substitute the known values:   W = 300,000 × 0.001667 / [1 – (1.001667)^(–300)] Step 4. Calculate the components: • Numerator: 300,000 × 0.001667 ≈ 500 • Denominator:   First, calculate (1.001667)^(300).   Since 300 × 0.001667 ≈ 0.5, we have (1.001667)^(300) ≈ e^(0.5) ≈ 1.64872.   Thus, (1 + r)^(–300) ≈ 1 / 1.64872 ≈ 0.60653.   So, Denom = 1 – 0.60653 ≈ 0.39347 Step 5. Compute W:   W ≈ 500 / 0.39347 ≈ 1271.92 Rounded to the nearest dollar, you can withdraw about $1,272 per month.