How much money must be deposited now at 7.0% interest per year so that $45,000 can...

Question

Question

How much money must be deposited now at 7.0% interest per year so that $45,000 can be withdrawn at the end of every year for the next 20 years?

Answer 1

Answer #1

Answer

The formula is:

r=interest rate =7%

n=years=20

A=annual withdrawal =45000

PV=present value =deposit amount now

Using the formula and values:

the deposit amount is $476730.64

Answer 2

Similar Homework Help Questions

How much should be deposited now at 10% compounded semiannually to make possible withdrawals of $3,000...

How much should be deposited now at 10% compounded semiannually to make possible withdrawals of $3,000 every 6 months for the next 10 years? Also, how much free cash will you have withdrawn (ie money the bank gave you as interest)?
Find how much money needs to be deposited now into an account to obtain 1,900 (future...

Find how much money needs to be deposited now into an account to obtain 1,900 (future value) in 8 years if the interest rate is 5.5% per year compounded daily (365 times per year).
A company must pay a $308, 000 settlement in 3 years. (a) What amount must be deposited now at 8% compounded semiannually to have enough money for the settlement? (b) How much interest will be e...

A company must pay a $308, 000 settlement in 3 years. (a) What amount must be deposited now at 8% compounded semiannually to have enough money for the settlement? (b) How much interest will be earned? (c) Suppose the company can deposit only $100, 000 now. How much more will be needed in 3 years? (d) Suppose the company can deposit $100 ,000 now in an account that pays interest continuously. What interest rate would they need to accumulate the...

What lump sum of money must be deposited into a bank account at the present time...

What lump sum of money must be deposited into a bank account at the present time so that $400 per month can be withdrawn for four years, with the first withdrawal scheduled for five years from today? The interest rate is 3/4% per month. (Hint: Monthly withdrawals begin at the end of the month 60.)
What lump sum of money must be deposited into a bank account at the present time...

What lump sum of money must be deposited into a bank account at the present time so that $600 per month can be withdrawn for five years, with the first withdrawal scheduled for six years from today? The interest rate is 1/4% per month (Hint: Monthly withdrawals begin at the end of the month 72.) The lump sum of money should be s (Round to the nearest dollar.)
Find how much money needs to be deposited now into an account to obtain $5,100 (Future...

Find how much money needs to be deposited now into an account to obtain $5,100 (Future Value) in 8 years if the interest rate is 7% per year compounded quarterly (4 times per year). The final amount is $ Round your answer to 2 decimal places

nstructor-created question Queston Help What lump sum of money must be deposited into a bank account...

nstructor-created question Queston Help What lump sum of money must be deposited into a bank account at the present time so that $600 per month can be withdrawn for sik years, with the first withdrawal scheduled for seven years from today? The interest rate is 34% per month. (Hint Monthly withdrawals begin at the end of the month 84 The lump sum of money should be $(Round to the nearest dollar.)
How much money must initially be deposited in a savings account paying 5% per year, compounded...

How much money must initially be deposited in a savings account paying 5% per year, compounded annually, to provide for ten annual withdrawals that start at $6000 and decrease by $500 each year?(Ans.$30504.19)
How much money should be deposited today in an account that earns 5% compounded semiannually so...

How much money should be deposited today in an account that earns 5% compounded semiannually so that it will accumulate to $8000 in three years? The amount of money that should be deposited is $ (Round up to the nearest cent.) You deposit $14,000 in an account that pays 5% interest compounded quarterly A. Find the future value after one year B. Use the future value formula for simple interest to determine the effective annual yield. A. The future value...

How much money must you invest now at 4.3% interest compounded continuously in order to have...

How much money must you invest now at 4.3% interest compounded continuously in order to have $10,000 at the end of 4 years? You must invest $ (Round to the nearest cent as needed.)