Determine the amount needed such that when it comes time for retirement, an individual can make monthly withdraws in the amount of $2,154 for 30 years from an account paying 5.1% compounded monthly. Round your answer to the nearest cent.

Use the present value formula for an ordinary annuity: PV = 2,154[1 − (1 + 0.051/12)^(-360)] ÷ (0.051/12). There are 360 monthly withdrawals, and the monthly interest rate is 0.00425. The present value is about $396,721.78, so the amount needed is choice A, $396,721.78.

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