You can deposit $4000 per year into an account that pays 12% interest. if you deposit such amounts for 15 years and start drawing money out of the account in equal annual installments, how much could you draw out each year for 20 years?
Answers
12/100 ×4000
12×40
$480 per year
we deposited for 20 years so
$480×20
$9600 Ans
Answer:
Explanation:
• You can deposit $4000 per year into an account that pays 12%
interest. If you deposit such amounts for 15 years and start
drawing money out of the account in equal annual instalments,
how much could you draw out each year for 20 years?
• A = $4000, r = .12 , n = 15 for the duration of deposit
FV of annual deposits for 15 years = 4000*(1.12^15 – 1) / .12
= 1,49,118.86
This value becomes PV for the annuity to continue for 20
years. Now we have to find the cash flow of this annuity.
A = 149118.86 *.12 / (1 – 1/ (1.12^20)) = 19,963.85• You can deposit $4000 per year into an account that pays 12%
interest. If you deposit such amounts for 15 years and start
drawing money out of the account in equal annual instalments,
how much could you draw out each year for 20 years?
• A = $4000, r = .12 , n = 15 for the duration of deposit
FV of annual deposits for 15 years = 4000*(1.12^15 – 1) / .12
= 1,49,118.86
This value becomes PV for the annuity to continue for 20
years. Now we have to find the cash flow of this annuity.
A = 149118.86 *.12 / (1 – 1/ (1.12^20)) = 19,963.85• You can deposit $4000 per year into an account that pays 12%
interest. If you deposit such amounts for 15 years and start
drawing money out of the account in equal annual instalments,
how much could you draw out each year for 20 years?
• A = $4000, r = .12 , n = 15 for the duration of deposit
FV of annual deposits for 15 years = 4000*(1.12^15 – 1) / .12
= 1,49,118.86
This value becomes PV for the annuity to continue for 20
years. Now we have to find the cash flow of this annuity.
A = 149118.86 *.12 / (1 – 1/ (1.12^20)) = 19,963.85• You can deposit $4000 per year into an account that pays 12%
interest. If you deposit such amounts for 15 years and start
drawing money out of the account in equal annual instalments,
how much could you draw out each year for 20 years?
• A = $4000, r = .12 , n = 15 for the duration of deposit
FV of annual deposits for 15 years = 4000*(1.12^15 – 1) / .12
= 1,49,118.86
This value becomes PV for the annuity to continue for 20
years. Now we have to find the cash flow of this annuity.
A = 149118.86 *.12 / (1 – 1/ (1.12^20)) = 19,963.85