3.4.3 A person establishes a sinking fund for retirement by contributing $7,500 per year at the end of each year for 20 years. The person then withdraws equal yearly payments for the next 20 years leaving the account with a zero balance. If the account pays 9% compounded annually, what yearly payment will the person receive during the last 20 years?
3.4.3 A person establishes a sinking fund for retirement by contributing $7,500 per year at the end of each year for 20 years. The person then withdraws equal yearly payments for the next 20 years leaving the account with a zero balance. If the account pays 9% compounded annually, what yearly payment will the person receive during the last 20 years?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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no-N-NI
3.4.3 A person establishes a sinking fund for retirement by contributing $7,500 per year at the end of each year
for 20 years. The person then withdraws equal yearly payments for the next 20 years leaving the account with a
zero balance. If the account pays 9% compounded annually, what yearly payment will the person receive
during the last 20 years?
Expert Solution
Step 1
Annual Payment (A)=$7,500
Duration (n)=20 years
Rate of interest (i)=0.09
Accumulated amount in the fund after 20 years will be
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