Your great - uncle Claude is 82 years old . Over the years , he has accumulated savings of $ 80,000 . He estimates that he will live another 10 years at the most and wants to spend his savings by then . ( If he lives longer than that , he figures you will be happy to take care of him . ) Uncle Claude places his $ 80,000 into an account earning 10 percent annually and sets it up in such a way that he will be making 10 equal annual withdrawals - the first one occurring one year from now — such that his account balance will be zero at the end of 10 years . How much will he be able to withdraw each year ?
Your great - uncle Claude is 82 years old . Over the years , he has accumulated savings of $ 80,000 . He estimates that he will live another 10 years at the most and wants to spend his savings by then . ( If he lives longer than that , he figures you will be happy to take care of him . ) Uncle Claude places his $ 80,000 into an account earning 10 percent annually and sets it up in such a way that he will be making 10 equal annual withdrawals - the first one occurring one year from now — such that his account balance will be zero at the end of 10 years . How much will he be able to withdraw each year ?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 14P
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Your great - uncle Claude is 82 years old . Over the years , he has accumulated savings of $ 80,000 . He estimates that he will live another 10 years at the most and wants to spend his savings by then . ( If he lives longer than that , he figures you will be happy to take care of him . ) Uncle Claude places his $ 80,000 into an account earning 10 percent annually and sets it up in such a way that he will be making 10 equal annual withdrawals - the first one occurring one year from now — such that his account balance will be zero at the end of 10 years . How much will he be able to withdraw each year ?
EBK CONTEMPORARY FINANCIAL MANAGEM
chapter5, problem 14p
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