Question

BE6.10 (LO 4) Henry Quincy wants to withdraw $30,000 each year for 10 years from a fund that earns 8% interest. How much must he invest today if the first withdrawal is at year-end

Answer 1

Answer:

$201,302

Explanation:

Calculation for How much must he invest today if the first withdrawal is at year-end

First step is to calculate (FVF-OAn,i) using financial calculation

R = 30,000

n = 10

i = 8%

(FVF-OAn,i)=(6.71008)

Now let calculate the amount to be Invested today using this formula

Investment today = R (FVF-OAn,i)

Let plug in the formula

Investment today= 30,000 (6.71008)

Investment today = $201,302

Therefore the amount he must invest today if the first withdrawal is at year-end is $201,302