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
You might be interested in
Answer:
The owner will maximize value if it waits 29th years Assuming 5% continuos inflation
Explanation:
the price formula for the future years is:
while it is adjusted for inflation at:
so the complete formula for value is:
Now, we can derivate and obtain the roots
Getting at a root exist at the 29th year.
The owner will maximize value if it waits 29th years Assuming 5% continuos inflation
