Question

3. How much money will you need to have in an account today if you wish to withdrawal $1,000 at the end of each quarter for the first 5 years and then $1,500 at the end of each quarter for another ten years. Assume that you can earn interest at 7% compounded quarterly throughout

Answer 1

A R C D E 2 Quarter Rate 3 Payment Amount 4 5 6 1 2 3 4 5 7 8 9 6 10 11 12 13 14 15 16 7 8 9 10 11 12 13 14 15 16 17 18 19 1.75% =0.07/4 Present Value 1000 982.800983 =B4/(1+$B$2)^A4 1000 965.897772 =B5/(1+$B$2)"A5 1000 949.285279 =B6/(1+$B$2)"A6 1000 932.958506 =B7/(1+$B$2)^A7 1000 916.912536 =B8/(1+$B$2) A8 1000 901.142542 =B9/(1+$B$2)^A9 1000 885.643776 =B10/(1+$B$2)"A10 1000 870.411573 =B11/(1+$B$2)^A11 1000 855.441349 =B12/(1+$B$2)^A12 1000 840.728599 =B13/(1+$B$2)^A13 1000 826.268893 =B14/(1+$B$2)^A14 1000 812.05788 =B15/(1+$B$2)"A15 1000 798.091283 =B16/(1+$B$2) A16 1000 784.364897 =B17/(1+$B$2)^A17 1000 770.874592 =B18/(1+$B$2)^A18 1000 757.616307 =B19/(1+$B$2)"A19 1000 744.586051 =B20/(1+$B$2)"A20 1000 731.779902 =B21/(1+$B$2)^A21 1000 719.194007 =B22/(1+$B$2) A22 1000 706.824577 =B23/(1+$B$2)^A23 1500 1042.00183 =B24/(1+$B$2)"A24 1500 1024.08043 =B25/(1+$B$2)"A25 1500 1006.46725 =B26/(1+$B$2)^A26 1500 989.157002 =B27/(1+$B$2)"A27 1500 972.144474 =B28/(1+$B$2)^A28 1500 955.424544 =B29/(1+$B$2)^A29 Sheet92 + 17 18 19 20 21 22 23 20 24 25 26 27 21 22 23 24 25 26 Sheet90 28 29 Sheet91

A B C D E 29 30 31 26 27 28 29 30 32 33 34 31 35 36 37 38 32 33 34 35 36 37 38 39 39 40 41 42 43 40 1500 955.424544 =B29/(1+$B$2)^A29 1500 938.992181 =B30/(1+$B$2) A30 1500 922.842438 =B31/(1+$B$2) A31 1500 906.970455 =B32/(1+$B$2)^A32 1500 891.371455 =B33/(1+$B$2)^A33 1500 876.040742 =B34/(1+$B$2) A34 1500 860.973702 =B35/(1+$B$2) A35 1500 846.1658 =B36/(1+$B$2) A36 1500 831.61258 =B37/(1+$B$2)^A37 1500 817.309661 =B38/(1+$B$2)^A38 1500 803.252738 =B39/(1+$B$2) A39 1500 789.437581 =B40/(1+$B$2)^A40 1500 775.86003 =B41/(1+$B$2)^A41 1500 762.516 =B42/(1+$B$2) A42 1500 749.401474 =B43/(1+$B$2)^A43 1500 736.512505 =B44/(1+$B$2) A44 1500 723.845214 =B45/(1+$B$2)^A45 1500 711.395788 =B46/(1+$B$2)^A46 1500 699.16048 =B47/(1+$B$2)^A47 1500 687.135606 =B48/(1+$B$2) A48 1500 675.317549 =B49/(1+$B$2)^A49 1500 663.702751 =B50/(1+$B$2)^A50 1500 652.287716 =B51/(1+$B$2)^A51 1500 641.069009 =B52/(1+$B$2)^A52 1500 630.043252 =B53/(1+$B$2)^A53 1500 619.207127 =B54/(1+$B$2)^A54 1500 608.557373 =B55/(1+$B$2)^A55 1500 598.090784 =B56/(1+$B$2)^A56 Sheet92 41 45 42 46 43 47 48 49 50 51 52 44 45 46 47 48 49 50 51 52 53 Sheet90 53 54 55 56 Sheet91 +

A B C D E F 38 39 40 41 42 43 44 45 46 47 48 49 50 51 35 1500 817.309661 =B38/(1+$B$2) A38 36 1500 803.252738 =B39/(1+$B$2) A39 37 1500 789.437581 =B40/(1+$B$ 2)^A40 38 1500 775.86003 =B41/(1+$B$2) A41 39 1500 762.516 =B42/(1+$B$ 2)^A42 40 1500 749.401474 =B43/(1+$B$2)^A43 41 1500 736.512505 =B44/(1+$B$ 2)^A44 42 1500 723.845214 =B45/(1+$B$2)^A45 43 1500 711.395788 =B46/(1+$B$2) A46 44 1500 699.16048 =B47/(1+$B$2)^A47 45 1500 687.135606 =B48/(1+$B$2)^A48 46 1500 675.317549 =B49/(1+$B$2)^A49 47 1500 663.702751 =B50/(1+$B$2) A50 48 1500 652.287716 =B51/(1+$B$2)^A51 49 1500 641.069009 =B52/(1+$B$2)^A52 50 1500 630.043252 =B53/(1+$B$2)-A53 51 1500 619.207127 =B54/(1+$B$ 2)^A54 52 1500 608.557373 =B55/(1+$B$2) A55 53 1500 598.090784 =B56/(1+$B$2)*A56 54 1500 587.80421 =B57/(1+$B$2)^A57 55 1500 577.694556 =B58/(1+$B$2)^A58 56 1500 567.758777 =B59/(1+$B$2)^A59 57 1500 557.993884 =B60/(1+$B$2) A60 58 1500 548.396938 =B61/(1+$B$2)^A61 59 1500 538.965049 =B62/(1+$B$2)^A62 60 1500 529.69538 =B63/(1+$B$2)^A63 Amount needed in account today 47069.5376 =SUM(C4:C63) Answer 52 53 54 55 56 57 58 59 60 61 62 63 64 65

Amount needed today = $47069.54 Answer

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