If Ellen won $250,000 the last week in February, 1996 and invested it by March 1, 1996 in a "sure thing" that pays 8% interest, compounded annually, what uniform annual amount can she withdraw on the first of March for 15 years starting in 2004?
If Ellen won $250,000 the last week in February, 1996 and invested it by March 1, 1996 in a "sure thing" that pays 8% interest, compounded annually, what uniform annual amount can she withdraw on the first of March for 15 years starting in 2004?
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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Solve again without using excel. Show the given.
![6-21
If Ellen won $250,000 the last week in February, 1996 and invested it by March 1, 1996 in a "sure
thing" that pays 8% interest, compounded annually, what uniform annual amount can she
withdraw on the first of March for 15 years starting in 2004?
Solution
n = 15
98
00
02
04
$250,000
P'
P' = 250,000(F/P, 8%, 7) = $428,500
A = 250,000(F/P, 8%, 7)(A/P, 8%, 15) = $50,048.80](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feb8c1436-161a-49d5-9170-df81fae24d04%2Fb6efd3f8-bf01-4124-a641-29d5e8aa5ad5%2F2icm7zq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6-21
If Ellen won $250,000 the last week in February, 1996 and invested it by March 1, 1996 in a "sure
thing" that pays 8% interest, compounded annually, what uniform annual amount can she
withdraw on the first of March for 15 years starting in 2004?
Solution
n = 15
98
00
02
04
$250,000
P'
P' = 250,000(F/P, 8%, 7) = $428,500
A = 250,000(F/P, 8%, 7)(A/P, 8%, 15) = $50,048.80
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