#1 How much money should be deposited now to withdraw $30,000 dollars per year f
ID: 1248133 • Letter: #
Question
#1 How much money should be deposited now to withdraw $30,000 dollars per year for the next 10 year? An interest rate of 10.5% is available.I have no idea how to go about these 2 problems, I'm frusterated. It is a test review problem.
#2 You are looking at retiring in 30 years. You plan to deposit $500 each month for the next 10 years. After 10 years your plan is to stop the deposits and let the money deposited accumulate until retirement. Projections show that you can expect an average annual interest rate of 12% compounded monthly over the 30 year span. If projections hold true, how much will you have on deposit at retirement?
Explanation / Answer
To answer these questions you need an annuity table where n=the number of periods for number 1 it n=10 and i= interest, 10.5 % because it is annual. For the second one you will need an annuity table and then you will have to add that with a future lump sum table where you follow the same logic of using of n and i. Each table is rounded and rounded differently so I can't give you the numbers exactly what factors you will need but you will multiply them by the amount of money they you want or have. Good luck with this problem and your exam!
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