Annuity Withdrawals and Interest Calculations

This video tutorial explains the payout annuity formula through an example where you want to withdraw $25,000 annually for 15 years from an account with a 5% interest rate. It covers identifying variables, calculating the initial balance needed, total withdrawals, and the interest earned over the period.

What is the annual withdrawal amount in the given problem?

• $35,000

• $30,000

• $25,000

• $20,000

How many years are the withdrawals planned for in the example?

• 15 years

• 10 years

• 20 years

• 12 years

What does 'P sub zero' represent in the payout annuity formula?

• Initial account balance

• Number of years

• Interest rate

• Annual withdrawal amount

How is the annual interest rate expressed in the formula?

• As a percentage

• As a fraction

• As a decimal

• As a whole number

What is the value of 'k' in this example?

• 4

• 2

• 1

• 0

What is the calculated initial balance required to meet the withdrawal goal?

• $300,000

• $259,491.45

• $200,000

• $375,000

How much total money will be withdrawn from the account over 15 years?

• $250,000

• $375,000

• $300,000

• $350,000

What is the total interest earned over the 15-year period?

• $125,000

• $115,508.55

• $150,000

• $100,000

What is the difference between the total amount withdrawn and the initial balance?

• $100,000

• $130,000

• $115,508.55

• $120,000

What is the interest rate used in the example?

• 6%

• 5%

• 4%

• 3%