Assume Rachel plans to invest an amount today in an account with an interest rate of 7.2% (compounded annually) and wait 5 years before withdrawing $4,000 at the start of each of the next 120 months (10 years), at which the account will have a zero balance. What is the initial amount that Rachel should invest today to make that happen? (Round your answer to the nearest dollar. Use the same compounding pattern for the deferred years as for the years payments were made.) Assume Rachel plans to invest an amount today in an account with an interest rate of 7.2% (compounded annually) and wait 5 years before withdrawing $4,000 at the start of each of the next 120 months (10 years), at which the account will have a zero balance. 

What is the initial amount that Rachel should invest today to make that happen?

Answer rating: 100% (QA)

To calculate the initial amount that Rachel should invest today we can use the present value formula ... View the full answer