Mr. Mason wants to open an account in a bank with a 3% interest rate, so he can withdraw after the 25th year the amount of USD4,500 each year for 5 years. a. How much should he deposit now? b. Should he decide not to withdraw any amount after 25 years, and instead withdraw the whole amount at the end of the 30th year, how much can he withdraw assuming that the interest rate is uniform? c. If Mr. Mason wishes to withdraw the amount of USD4,500 each year for 5 years, beginning at the end of the first year after the making the initial deposit, and USD5,000 each year for the succeeding 5 years, how much should he deposit now? Also, based on the initial deposit computed, how much can he withdraw each year for five years after the 30th year if no withdrawals are made before the 30th year?
Mr. Mason wants to open an account in a bank with a 3% interest rate, so he can withdraw after the 25th year the amount of USD4,500 each year for 5 years. a. How much should he deposit now? b. Should he decide not to withdraw any amount after 25 years, and instead withdraw the whole amount at the end of the 30th year, how much can he withdraw assuming that the interest rate is uniform? c. If Mr. Mason wishes to withdraw the amount of USD4,500 each year for 5 years, beginning at the end of the first year after the making the initial deposit, and USD5,000 each year for the succeeding 5 years, how much should he deposit now? Also, based on the initial deposit computed, how much can he withdraw each year for five years after the 30th year if no withdrawals are made before the 30th year?
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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Transcribed Image Text:2. Show your solutions completely.
Mr. Mason wants to open an account in a bank with a 3% interest rate, so he can withdraw after
the 25th year the amount of USD4,500 each year for 5 years.
a. How much should he deposit now?
b. Should he decide not to withdraw any amount after 25 years, and instead withdraw the whole
amount at the end of the 30th year, how much can he withdraw assuming that the interest rate is
uniform?
c. If Mr. Mason wishes to withdraw the amount of USD4,500 each year for 5 years, beginning at
the end of the first year after the making the initial deposit, and USD5,000 each year for the
succeeding 5 years, how much should he deposit now? Also, based on the initial deposit
computed, how much can he withdraw each year for five years after the 30th year if no
withdrawals are made before the 30th year?
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