You want to be able to withdraw the specified amount periodically from a payout annuity with the given terms. Find how much the account needs to hold to make this possible. Round your answer to the nearest dollar.

Regular withdrawal:	$300
Interest rate:	2.5%
Frequency	quarterly
Time:	26 years

To calculate how much the account needs to hold initially in order to allow for regular withdrawals, we can use the formula for the present value of an ordinary annuity:

\[
PV = P \times \left[ \frac{1 - (1 + r)^{-nt}}{r} \right]
\]

Where:
- $PV$ is the present value (the amount needed in the account),
- $P$ is the regular withdrawal amount,
- $r$ is the interest rate per period,
- $n$ is the number of periods per year,
- $t$ is the total number of years.

### Given:
- $P = 300$ (regular quarterly withdrawal),
- Annual interest rate $= 2.5\% = 0.025$,
- Quarterly interest rate $r = \frac{0.025}{4} = 0.00625$,
- $n = 4$ (quarterly payments per year),
- $t = 26$ years.

Now, let's plug these values into the formula and calculate the present value (PV).The account needs to hold approximately **$22,891** to support quarterly withdrawals of $300 for 26 years at an interest rate of 2.5%.

Would you like further details or explanations on any part of this calculation? Here are some related questions you might explore:

1. What if the interest rate were different, say 3%?
2. How would the required account balance change if withdrawals were made monthly instead of quarterly?
3. What happens to the required account balance if the withdrawal amount increases?
4. How does the time period affect the initial amount required?
5. What if you wanted to make yearly withdrawals instead of quarterly?

**Tip**: Changing the withdrawal frequency can significantly affect how much needs to be in the account initially.

You want to be able to withdraw the specified amount periodically from a payout annuity with the given terms. Find how much the account needs to hold to make this possible. Round your answer to the nearest dollar.

Find out how to calculate the present value needed to support quarterly withdrawals of $300 for 26 years, given an interest rate of 2.5%. This step-by-step solution uses the present value of an annuity formula and explains the core concepts of time value of money and interest rate calculations. Ideal for high school students in Grades 11-12.

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