Calculate the time period.

Explanation of Solution
The present value (P) is $20,000. The first withdraw (D) is $5,000 that has taken place now. The second year’s withdrawal (D2) is $4,500 and decreases the withdrawal (d) by $500. Thereafter, interest rate (i) is 8%.
Time period (n) can be calculated as follows:
Substitute the time period as 5 years in the above calculation.
The calculated value is less than $15,000. Thus, it increases the time period to 5.6.
Since the calculated value is nearly equal to $15,000, it is confirmed that the time period is 5.6 years.
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Chapter 3 Solutions
ENGR.ECONOMY CUSTOM FOR TAMU ISEN 667
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