25.07.2022 - 17:33

# What is the amount of 10 equal annual deposits that can provide five annual withdrawals when a first withdrawal of $5,000 is made at the end of year 11 and subsequent withdrawals increase at the rate of 8% per year over the previous years withdrawals if t Question: What is the amount of 10 equal annual deposits that can provide five annual withdrawals when a first withdrawal of$5,000 is made at the end of year 11 and subsequent withdrawals increase at the rate of 8% per year over the previous years withdrawals if the interest rate is 9% compounded annually?

The problem can be solved using the formula for the present value of an annuity, which calculates the total amount that needs to be deposited over the 10-year period to provide the required withdrawals. Using the given information, we can break down the problem into two parts: 1. Calculating the value of the first withdrawal at the end of year 11, which will be used as the basis for subsequent withdrawals. Using compound interest formula: FV = PV (1+r)^n FV = $5,000 PV = ? r = 9% n = 10 years$5,000 = PV (1+0.09)^10 PV = $2,224.49 Therefore, the first withdrawal of$5,000 will be based on an investment of $2,224.49 at the end of year 10. 2. Calculating the total amount of annual deposits needed to provide the required withdrawals over the remaining 5-year period. Using the formula for present value of an annuity: PV = PMT x [(1 - (1 + r)^-n) / r] PV =$2,224.49 PMT = ? r = 9% n = 5 years $2,224.49 = PMT x [(1 - (1 + 0.09)^-5) / 0.09] PMT =$662.58 Therefore, 10 equal annual deposits of $662.58 will be needed to provide the required withdrawals. Do you know the answer? Not sure about the answer? Find the right answer to the question What is the amount of 10 equal annual deposits that can provide five annual withdrawals when a first withdrawal of$5,000 is made at the end of year 11 and subsequent withdrawals increase at the rate of 8% per year over the previous years withdrawals if t by subject Business, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.