Find the present value PV of the annuity account necessary to fund the withdrawal given. HINT [See Quick Example 3.] (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $2,800 per quarter for 10 years, if the account earns 6% per year PV = $ Need Help? Read It
Find the present value PV of the annuity account necessary to fund the withdrawal given. HINT [See Quick Example 3.] (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $2,800 per quarter for 10 years, if the account earns 6% per year PV = $ Need Help? Read It
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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![**Present Value of Annuity Account Calculation**
To determine the present value \( PV \) of the annuity account required to fund the specified withdrawal, consider the scenario below.
**Scenario Details:**
- Withdrawal Amount: $2,800 per quarter
- Duration: 10 years
- Annual Interest Rate: 6% (compounded quarterly)
Assume that withdrawals and compounding occur at the same intervals (end-of-period withdrawals). Round the final answer to the nearest cent.
**Formula Use:**
To calculate the present value, use the annuity formula suitable for present value calculations with the specified conditions.
**Input Field:**
\[
PV = \$ \text{[Input Box]}
\]
**Additional Resources:**
If you need further assistance, click the "Read It" button for more detailed examples and explanations.
**Buttons:**
- "Read It" for help
- "Reset" to clear inputs
Use these details and the annuity formula to calculate the present value needed to achieve the desired withdrawals over the specified period.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0448891f-ce57-4f5c-ad0b-752a17482601%2F3ff81413-f2e2-44e4-88d0-18b68997d570%2Fy1h57si_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Present Value of Annuity Account Calculation**
To determine the present value \( PV \) of the annuity account required to fund the specified withdrawal, consider the scenario below.
**Scenario Details:**
- Withdrawal Amount: $2,800 per quarter
- Duration: 10 years
- Annual Interest Rate: 6% (compounded quarterly)
Assume that withdrawals and compounding occur at the same intervals (end-of-period withdrawals). Round the final answer to the nearest cent.
**Formula Use:**
To calculate the present value, use the annuity formula suitable for present value calculations with the specified conditions.
**Input Field:**
\[
PV = \$ \text{[Input Box]}
\]
**Additional Resources:**
If you need further assistance, click the "Read It" button for more detailed examples and explanations.
**Buttons:**
- "Read It" for help
- "Reset" to clear inputs
Use these details and the annuity formula to calculate the present value needed to achieve the desired withdrawals over the specified period.
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