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These amounts of money will be withdrawn from your checking account that pays you a 4.6% interest rate every year.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Year	Amount Withdrawn	Present Value @ 4.6%	Present Value of Amount Withdrawn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

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