Harry Rawlings wants to withdraw $10,000 (including principal) from an investment fund at the end of each year for 5 years. How

Question

2 years ago

6

should he compute his required initial investment at the beginning of the first year if the fund earns 6% compounded annually?

1 answer:

Sergio039 [100] · Answer 1 · 2022-08-02T22:21:53+03:00

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