Susan and Jeff each make deposits of 175 at the end of each year for 25...

 

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Susan and Jeff each make deposits of 175 at the end of each year for 25 years. Starting at the end of year 26, Susan makes annual withdrawals of X for 20 years and Jeff makes annual withdrawals of Y for 20 years. Both funds have a balance of 0 after the last withdrawal. Susan's fund earns an annual effective interest rate of 5.5%. Jeff's fund earns an annual effective interest rate of 8.2%. Calculate Y-X. Susan and Jeff each make deposits of 175 at the end of each year for 25 years. Starting at the end of year 26, Susan makes annual withdrawals of X for 20 years and Jeff makes annual withdrawals of Y for 20 years. Both funds have a balance of 0 after the last withdrawal. Susan's fund earns an annual effective interest rate of 5.5%. Jeff's fund earns an annual effective interest rate of 8.2%. Calculate Y-X.

Answer rating: 100% (QA)

To solve this problem we can use the future value of an annuity formula to find the balances of Susa... View the full answer