A contractor would like to invest in a real- estate development project and expecting to get $20,000 annually. To achieve that goal of the investment, how much should be deposited as a single sum of money with 5% compounded annually where the first withdrawal occurring 1 year after the deposit. What if the contractor would invest 50% of the money that he got after 5 years in a fund that pay 8% compounded annually by making 10 equal annual withdrawals from the fund. How much can he withdraw when the first withdrawal occur 1 year after deposit. Draw cashflow diagram

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
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A contractor would like to invest in a real-
estate development project and expecting to
get $20,000 annually.
A. To achieve that goal of the investment, how
much should be deposited as a single sum of
money with 5% compounded annually where
the first withdrawal occurring 1 year after the
deposit.
B. What if the contractor would invest 50% of
the money that he got after 5 years in a fund
that pay 8% compounded annually by making
10 equal annual withdrawals from the fund.
How much can he withdraw when the first
withdrawal occur 1 year after deposit.
C. Draw cashflow diagram
Transcribed Image Text:A contractor would like to invest in a real- estate development project and expecting to get $20,000 annually. A. To achieve that goal of the investment, how much should be deposited as a single sum of money with 5% compounded annually where the first withdrawal occurring 1 year after the deposit. B. What if the contractor would invest 50% of the money that he got after 5 years in a fund that pay 8% compounded annually by making 10 equal annual withdrawals from the fund. How much can he withdraw when the first withdrawal occur 1 year after deposit. C. Draw cashflow diagram
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