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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Question
An investor has a principal amount of $P. If he desires a payout (return) of 0.1P each year, how many years will it take to deplete an account that earns 8% per year? 0.1P = P(A/P, 8%,N), so N ∼=21 years. A payout duration table can be constructed for select payout percentages and
Transcribed Image Text:Interest Rate per Year
4% 6% 8%
20.9
10%
Payout per Year 10%
(% of principal) 20%
30%
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