You have just received an inheritance of $28,000 and would like to invest it into an account. The bank offers two investment plans, one for 4 years at 5.8% compounded annually and another for 3 years at 7.083% compounded annually. You want to make equal annual withdrawals from the account over the life time of the loan. Which investment will yield the highest annual withdraw and by what amount, given that the account will be zeroed out by the end of that period?
a.
4 year account; $8,043.59
c.
4 year account; $10,436.34
b.
3 year account; $10,685.63
d.

Question

You have just received an inheritance of $28,000 and would like to invest it into an account. The bank offers two investment plans, one for 4 years at 5.8% compounded annually and another for 3 years at 7.083% compounded annually.  You want to make equal annual withdrawals from the account over the life time of the loan. Which investment will yield the highest annual withdraw and by what amount, given that the account will be zeroed out by the end of that period?
a.
4 year account; $8,043.59
c.
4 year account; $10,436.34
b.
3 year account; $10,685.63
d.