Question

Find the amount necessary to fund the given with drawls. Quarterly withdrawals of $850 for 9 years with an interest rate of 4.4% compounded quarterly

Answer 1

Answer:

The principal amount necessary to fund is $573.31

Step-by-step explanation:

Given as :

The quarterly withdrawal amount = A = $850

The time period for withdrawals = t = 9 years

The rate of interest = r = 4.4% compounded quarterly

Let The principal amount necessary to fund = $p

Now, From Compound Interest

Amount = Principal × $(1+\frac{rate}{100\times 4})^{4\times time}$

Or, $850 = p × $(1+\frac{r}{100\times 4})^{4\times t}$

Or, $850 = p × $(1+\frac{4.4}{100\times 4})^{4\times 9}$

Or, $850 = p × $(1.011)^{36}$

Or, $850 = p × 1.4826

∴ p = $\frac{850}{1.4826}$

i.e p = $573.31

So,The principal amount necessary to fund = p = $573.31  

Hence, The principal amount necessary to fund is $573.31   Answer