How much money must be deposited now at 7.0% interest per year so that $45,000 can...

Question

Question

How much money must be deposited now at 7.0% interest per year so that $45,000 can be withdrawn at the end of every year for the next 20 years?

business economics

Answer 1

Answer #1

Answer

The formula is:

r=interest rate =7%

n=years=20

A=annual withdrawal =45000

PV=present value =deposit amount now

Using the formula and values:

the deposit amount is $476730.64

Answer 2

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