John deposits RM10,000 at the beginning of each year for ten years, into a financial instrument offering dividend rate of 10% per year. He then withdraws annualized level payments of P starting at the beginning of eleventh year and continuing for 15 years later, at dividend rate of 5% per year. At the end of 25 years, the fund balance remains zero. 1. Calculate the present value of the annualized deposits he makes. ». Calculate the annualized level payment of withdraw, P. . Determine the balance of the fund at the end of 15 years starting from the yea he makes his first deposit, just before the next sixth withdraw is being made
John deposits RM10,000 at the beginning of each year for ten years, into a financial instrument offering dividend rate of 10% per year. He then withdraws annualized level payments of P starting at the beginning of eleventh year and continuing for 15 years later, at dividend rate of 5% per year. At the end of 25 years, the fund balance remains zero. 1. Calculate the present value of the annualized deposits he makes. ». Calculate the annualized level payment of withdraw, P. . Determine the balance of the fund at the end of 15 years starting from the yea he makes his first deposit, just before the next sixth withdraw is being made
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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Transcribed Image Text:MATHEMATICS OF FINANCE QUESTION
John deposits RM10,000 at the beginning of each year for ten years, into a
financial instrument offering dividend rate of 10% per year. He then
withdraws annualized level payments of P starting at the beginning of
eleventh year and continuing for 15 years later, at dividend rate of 5% per
year. At the end of 25 years, the fund balance remains zero.
a. Calculate the present value of the annualized deposits he makes.
b. Calculate the annualized level payment of withdraw, P.
c. Determine the balance of the fund at the end of 15 years starting from the year
he makes his first deposit, just before the next sixth withdraw is being made
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