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An employee plans to retire in 30 years and wants to create a personal retirement fund where he can deposit a constant amount every 3 months until his retirement date, in order to be able to initiate a series of annual withdrawals of magnitude $ 60,000 for the next 20 years after it. Assume that withdrawals from the account start exactly one year after the last deposit, and that the deposits stop on the same day as their ithdra wal Detormine themagnit

An employee plans to retire in 30 years and wants to create a personal retirement fund where he can deposit a constant amount every 3 months until his retirement date, in order to be able to initiate a series of annual withdrawals of magnitude $ 60,000 for the next 20 years after it. Assume that withdrawals from the account start exactly one year after the last deposit, and that the deposits stop on the same day as their ithdra wal Detormine themagnit

Essentials Of Investments
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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An employee plans to retire in 30 years and wants to create a personal retirement fund where he can deposit a constant amount every 3 months until his retirement date, in order to be able to initiate a series of annual withdrawals of magnitude $ 60,000 for the next 20 years after it. Assume that withdrawals from the account start exactly one year after the last deposit, and that the deposits stop on the same day as their withdrawal. Determine the magnitude of quarterly deposits if your financial advisor promises you an interest rate of 8% per annum compounded quarterly over the entire period you stay in the fund (50 years).
Transcribed Image Text:An employee plans to retire in 30 years and wants to create a personal retirement fund where he can deposit a constant amount every 3 months until his retirement date, in order to be able to initiate a series of annual withdrawals of magnitude $ 60,000 for the next 20 years after it. Assume that withdrawals from the account start exactly one year after the last deposit, and that the deposits stop on the same day as their withdrawal. Determine the magnitude of quarterly deposits if your financial advisor promises you an interest rate of 8% per annum compounded quarterly over the entire period you stay in the fund (50 years).
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