A small business owner has $57,485.03 set aside in a fund to be used for a project that will take 10 years. He plans to withdraw money from this fund at the end of each quarter. The fund earns annual 4.8% compounded quarterly. Unfortunately, the business owner faces difficulty dealing with the fund manager, who says that the money has to be locked in for 2 years (no withdrawals during that period). Thus, the start of the project will be deferred for 2 years, but still will take 10 years after that deferred time. How much can the business owner withdraw from this fund at the end of each quarter after the lock in period?
A small business owner has $57,485.03 set aside in a fund to be used for a project that will take 10 years. He plans to withdraw money from this fund at the end of each quarter. The fund earns annual 4.8% compounded quarterly. Unfortunately, the business owner faces difficulty dealing with the fund manager, who says that the money has to be locked in for 2 years (no withdrawals during that period). Thus, the start of the project will be deferred for 2 years, but still will take 10 years after that deferred time. How much can the business owner withdraw from this fund at the end of each quarter after the lock in period?
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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A small business owner has $57,485.03 set aside in a fund to be used for a project that will take 10 years. He plans to withdraw money from this fund at the end of each quarter. The fund earns annual 4.8% compounded quarterly. Unfortunately, the business owner faces difficulty dealing with the fund manager, who says that the money has to be locked in for 2 years (no withdrawals during that period). Thus, the start of the project will be deferred for 2 years, but still will take 10 years after that deferred time.
How much can the business owner withdraw from this fund at the end of each quarter after the lock in period?
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