Question

CES Brief Exercise 6-10 Tony Quincy wants to withdraw $34,100 each year for 13 years from a fund that earns 9% interest. Click here to view factor tables How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.) First withdrawal at year-end First withdrawal immediately dy

Answer 1

If first withdrawal is at year end - Amount to be deposited today is $255,303

If first withdrawal is at year beginning: Amount to be deposited today is $278,281

Workings:

If first withdrawal is at year end

Yr	Amount to be withdrawn	PVF@9%	Present value of Withdrawals
1	34100	0.91743	31,284
2	34100	0.84168	28,701
3	34100	0.77218	26,331
4	34100	0.70843	24,157
5	34100	0.64993	22,163
6	34100	0.59627	20,333
7	34100	0.54703	18,654
8	34100	0.50187	17,114
9	34100	0.46043	15,701
10	34100	0.42241	14,404
11	34100	0.38753	13,215
12	34100	0.35553	12,124
13	34100	0.32618	11,123
Amount to be deposited today	255,303

If first withdrawal is at year beginning

Yr	Amount to be withdrawn	PVF@9%	Present value of Withdrawals
1	34100	1.00000	34,100
2	34100	0.91743	31,284
3	34100	0.84168	28,701
4	34100	0.77218	26,331
5	34100	0.70843	24,157
6	34100	0.64993	22,163
7	34100	0.59627	20,333
8	34100	0.54703	18,654
9	34100	0.50187	17,114
10	34100	0.46043	15,701
11	34100	0.42241	14,404
12	34100	0.38753	13,215
13	34100	0.35553	12,124
Amount to be deposited today	278,281