Harry Rawlings wants to withdraw $10,000 (including principal) from an investment fund at the end of each year for 5 years. How
should he compute his required initial investment at the beginning of the first year if the fund earns 6% compounded annually?
1 answer:
Answer:
$44,651.06
Explanation:
We use the Present value function for this question. The calculation is shown in the attached spreadsheet
Data are given in the question
Future value = $0
Rate of interest = 6%
NPER = 5 years
PMT = $25,000
The formula is shown below:
= PV(Rate;NPER;-PMT;FV;type)
After solving this, the present value is $44,651.06
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