At time t = 0, Paul deposits P into a fund crediting interest at an effective...

 

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At time t = 0, Paul deposits P into a fund crediting interest at an effective annual interest rate of 7.8%. At the end of each year in years 9 through 24, Paul withdraws an amount sufficient to purchase an annuity-due of 110 per month for 7 years at a nominal interest rate of 6.6% compounded monthly. Immediately after the withdrawal at the end of year 24, the fund value is zero. Calculate P. [3.a-c #04] At time t = 0, Paul deposits P into a fund crediting interest at an effective annual interest rate of 7.8%. At the end of each year in years 9 through 24, Paul withdraws an amount sufficient to purchase an annuity-due of 110 per month for 7 years at a nominal interest rate of 6.6% compounded monthly. Immediately after the withdrawal at the end of year 24, the fund value is zero. Calculate P. [3.a-c #04]

Answer rating: 100% (QA)

The effective annual interest rate of the fund is 78 so the mont... View the full answer