You inherited $100,000 and deposit the funds (today at t = 0) in a saving institution where the money will grow at 7.8% interest for exactly n = 7 years. Then exactly one year later, (at n + 1) you start to withdraw the money in 6 annual equal withdrawals, depleting the account. How much can you withdraw to the nearest cent each year? Assume that the interest paid stay the same for both the period that the money is growing as well as after you start withdrawing it.
You inherited $100,000 and deposit the funds (today at t = 0) in a saving institution where the money will grow at 7.8% interest for exactly n = 7 years. Then exactly one year later, (at n + 1) you start to withdraw the money in 6 annual equal withdrawals, depleting the account. How much can you withdraw to the nearest cent each year? Assume that the interest paid stay the same for both the period that the money is growing as well as after you start withdrawing it.
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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You inherited $100,000 and deposit the funds (today at t = 0) in a saving institution where the money will grow at 7.8% interest for exactly n = 7 years. Then exactly one year later, (at n + 1) you start to withdraw the money in 6 annual equal withdrawals, depleting the account. How much can you withdraw to the nearest cent each year? Assume that the interest paid stay the same for both the period that the money is growing as well as after you start withdrawing it.
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