se five years, he will retire and may begin drawing out $ 20,000 per year for five years, starting on the last day of each year (in this case, the end of ye
se five years, he will retire and may begin drawing out $ 20,000 per year for five years, starting on the last day of each year (in this case, the end of ye
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 39P
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You hire Thomas to work for you for five years, and you agree to put away enough money as a lump sum now to fund an annuity for him. At the end of those five years, he will retire and may begin drawing out $ 20,000 per year for five years, starting on the last day of each year (in this case, the end of year 6, from when this arrangement began, through year 10). How much must you invest today if your guaranteed interest rate is 3% compounded annually for all 10 years?
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