Now that young King Solomon has inherited the kingdom of Israel, and a massive amount of wealth that he can invest, he wants to plan for his "retirement." Since he doesn't know how long he'll live, and data on life expectancy is scarce, he reasons that he just wants a regular "cash flow" over the course of his life. With that in mind, how many shekels would he need to deposit at 20 percent interest compounded every year in order to be able to withdraw 50 shekels at the end of every year for seventy years?
Now that young King Solomon has inherited the kingdom of Israel, and a massive amount of wealth that he can invest, he wants to plan for his "retirement." Since he doesn't know how long he'll live, and data on life expectancy is scarce, he reasons that he just wants a regular "cash flow" over the course of his life. With that in mind, how many shekels would he need to deposit at 20 percent interest compounded every year in order to be able to withdraw 50 shekels at the end of every year for seventy years?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Now that young King Solomon has inherited the kingdom of Israel, and a massive amount of wealth that he can invest, he wants to plan for his "retirement." Since he doesn't know how long he'll live, and data on life expectancy is scarce, he reasons that he just wants a regular "cash flow" over the course of his life. With that in mind, how many shekels would he need to deposit at 20 percent interest compounded every year in order to be able to withdraw 50 shekels at the end of every year for seventy years?
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