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per month can be withdrawn for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.)
Homework Answers
Monthly withdrawal = $400
No. of withdrawals = 48 ( for 4 years)
Withdrawal will start at the end of month 60.
R = 3/4% or .75%
So,
Present value of the withdrawals = (400*(1-1/1.0075^48)/.0075)*(1/1.0075^60)
Present value of the withdrawals = $10266.4 or $10266
Therefore, funds to be deposited in present value are $10266.4 or $10266.
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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...
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