Assume that you will be opening a savings account today by depositing $100,000. The savings account pays
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume that you will be opening a savings account today by depositing $100,000. The savings account pays 5 percent compound annual interest, and this rate is
assumed to remain in effect for all future periods. Four years from today you will withdraw R dollars. You will continue to make additional annual withdrawals of
R dollars for a while longer - making your last withdrawal at the end of year 9 - to achieve the following pattern of cash flows over time. (Note: Today is time
period zero; one year from today is the end of time period 1; etc.)
How large must R be to leave you with exactly a zero balance after your final R withdrawal is made at the end of year 9? (Tip: Making use of an annuity table or
formula will make your work a lot easier!)
Posted Date: