Question

You will need to withdraw the following amounts of money in the next several years:

Beginning of year 1 (or today): $6,000

Beginning of years 2~4: $10,000

Beginning of the following year: $13,000

These amounts of money will be withdrawn from your checking account that pays you a 4.6% interest rate every year. How much should your parents deposit into your account today, so that it's just enough for you to make the required money withdrawals?

(Increase decimal places for any intermediate calculations, from the default 2 to, for example, 6 or even higher. The more the better! Only round your final answer to TWO decimal places: for example, 1,000.23. Do NOT use "$" in your answer.)

Answer #1

The amount of withdrawal at the beginning of

Year 1 $6000

Year 2 $10000

Year 3 $10000

Year 4 $10000

Year 5 $13000

As 4.6% p.a. interest is there, we have to calculate the present value of these future withdrawals so that it is equal to the present value of deposit which is made today.

Year | Amount Withdrawn | Present Value @ 4.6% | Present Value of Amount Withdrawn |

1 | 6000 | 1.00000000 | 6000.00000000 |

2 | 10000 | 0.95602294 | 9560.22944551 |

3 | 10000 | 0.91397987 | 9139.79870507 |

4 | 10000 | 0.87378573 | 8737.85727062 |

5 | 13000 | 0.83535920 | 10859.66964800 |

Deposit in Account
Today |
44297.55506921 |

**Amount to be deposited today so that it's just enough to
make required withdrawal = 44297.56**

**I hope it will help you in the study.**

**Feel free to ask any query.**

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**Thank You!**

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