How much should you deposit today in order to withdraw $5,000 each year for 7 years?...
How much should you deposit today in order to withdraw $5,000 each year for 7 years? Your first withdraw will start 5 years from now and your deposit will earn 4% interest.
Homework Answers
Present value=Cash flows*Present value of discounting factor(rate%,time period)
=5000/1.04^5+5000/1.04^6+...............+5000/1.04^11
=5000[1/1.04^5+1/1.04^6+.............+1/1.04^11]
=(5000*5.130581487)
=$25652.91(Approx).
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