Question

A deposit of $10,000 is made a year from now, a second deposit of $10,000 is...

A deposit of $10,000 is made a year from now, a second deposit of $10,000 is made at the end of the year 5, and a deposit of $3000 is made at the end of year 8. The account earns 6% interest. You want to withdraw an equal amount, X at the end of each year for the next 10 years. What is the amount of X if the goal is to empty the account?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Step 1) Calculate the Future value of all the three deposits at the end of year 8

Now we need to calculate the annuity payments that have a PV equal to 29946.46

We are given the following information:

Annual payment PMT To be calculated
rate of interest r 6.00%
number of years n 10
Present value PV $          29,946.46

We need to solve the following equation to arrive at the required PMT

So annual withdrawal can be of $4068.76 for the account to hold 0 balance at the end

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
How much must you deposit each year into your retirement account starting now and continuing through...
How much must you deposit each year into your retirement account starting now and continuing through year 10 if you want to be able to withdraw $90,000 per year forever, beginning 32 years from now? Assume the account earns interest at 12% per year. The amount to be deposited is determined to be $
How much must you deposit each year into your retirement account starting now and continuing through...
How much must you deposit each year into your retirement account starting now and continuing through year 15 if you want to be able to withdraw $90,000 per year forever, beginning 26 years from now? Assume the account earns interest at 10% per year. The amount to be deposited is determined to be
You want to deposit an equal amount of money every year at the end of each...
You want to deposit an equal amount of money every year at the end of each of the next 30 years into an account that pays 6.5% annually compounded interest, in order to be able to retire comfortably. During your retirement years, you want to have the ability to withdraw at the end of each of the 15 years, the amount of $32,000. During your retirement years, you will keep your money in an account that earns 3% annually compounded...
How much must you deposit each year into your retirement account starting now and continuing through...
How much must you deposit each year into your retirement account starting now and continuing through year 10 if you want to be able to withdraw $90,000 per year forever, beginning 27 years from now? Assume the account earns interest at 13% per year.
How much must you deposit each year into your retirement account starting now and continuing through...
How much must you deposit each year into your retirement account starting now and continuing through year 15 if you want to be able to withdraw $95,000 per year forever, beginning 31 years from now? Assume the account earns interest at 11% per year. The amount to be deposited is determined to be $_________ .
You want to deposit an equal amount of money every year at the end of each...
You want to deposit an equal amount of money every year at the end of each of the next 30 years into an account that pays 7.5% annually compounded interest, in order to be able to retire comfortably. During your retirement years, you want to have the ability to withdraw at the end of each of the 15 years, the amount of $32,000. During your retirement years, you will keep your money in an account that earns 3% annually compounded...
You want to deposit an equal amount of money every year at the end of each...
You want to deposit an equal amount of money every year at the end of each of the next 30 years into an account that pays 7.5% annually compounded interest, in order to be able to retire comfortably. During your retirement years, you want to have the ability to withdraw at the end of each of the 15 years, the amount of $32,000. During your retirement years, you will keep your money in an account that earns 3% annually compounded...
1/ You deposit $3000 at the beginning of each year into an account earning 5% interest...
1/ You deposit $3000 at the beginning of each year into an account earning 5% interest compounded annually. How much will you have in the account in 20 years? 2/Suppose you want to have $400,000 for retirement. Your account earns 7% interest compounded monthly. If you deposit $200 at the end of each month, how long will it take you to reach your goal? Round to the nearest year.
One year from now, you deposit $500 in a savings account. You deposit $1,800 the next...
One year from now, you deposit $500 in a savings account. You deposit $1,800 the next year. Then you wait two more years (t=4) and deposit $1,000. If your account earns 6% interest per year, compounded annually, and you make no further deposits or withdrawals, how much will be in the account 11 years from now?
1. John wishes to make a quarterly deposit into his savings account so that at the...
1. John wishes to make a quarterly deposit into his savings account so that at the end of 10 years the account balance will be $10,000. If the account earns 6% annual interest, compounded quarterly, how much should he deposit each quarter? 2. The maintenance on a machine is expected to be $155 at the end of the first year, then increasing by $35 each year for the next 7 years. What sum of money would need to be set...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT