Exploring Payout Annuities

The video tutorial explains how to calculate monthly withdrawals from a retirement account using a payout annuity formula. It starts with an initial savings of $700,000 and an interest rate of 6%. The tutorial breaks down the formula components, including the interest rate, number of withdrawals per year, and the duration of withdrawals over 20 years. By applying the formula, the tutorial demonstrates how to solve for the monthly withdrawal amount, which is approximately $4,196.85.

What is the total amount saved for retirement?

• $700,000

• $7,000,000

• $700

• $70,000

What is the annual interest rate on the retirement account?

• 9%

• 12%

• 3%

• 6%

For how many years are the withdrawals planned?

• 30 years

• 20 years

• 15 years

• 10 years

How often per year will withdrawals be made from the account?

• Quarterly

• Monthly

• Annually

• Biannually

What does 'R' represent in the annuity formula?

• Interest rate

• Number of withdrawals per year

• Total amount saved

• Number of years

What does 'N' represent in the formula?

• Initial amount

• Number of years

• Number of withdrawals per year

• Interest rate

How is the interest rate written in decimal form for the formula?

• 6

• 0.06

• 0.6

• 0.006

What operation is performed to eliminate the denominator in the formula?

• Addition

• Subtraction

• Multiplication

• Division

What is the purpose of dividing by 'R over N' in the formula?

• To simplify the formula

• To adjust the interest rate

• To increase the withdrawal amount

• To decrease the number of years

What is the final monthly withdrawal amount calculated?

• $419.68

• $4,196.85

• $41,968.50

• $4,196,850