Deposits $10,000 at the beginning of each year for ten years, into a financial instrument offering a dividend rate of 10% per year. He then withdraws annualized level payments of p starting at the beginning of the eleventh year and continuing for 15 years later, at a dividend rate of 5% per year. At the end of 25 years, the fund balance remains zero.

a. Calculate the present value of the annualized deposits he makes. By using annuity due n=10 and i=10% we got $67590.24

b. Calculate the annualized level payment of withdrawal, pp=$16085.64.

c. Determine the balance of the fund at the end of 15 years starting from the year he makes his first. deposit, just before the next sixth withdrawal is made.

Find c shows the calculation detail.

Answer rating: 100% (QA)

SOLUTION To find the balance of the fund at the end of 15 years just before the sixth withdrawal is made we need to calculate the future value of the annual deposits and the future value of the withdr... View the full answer