Interest 8% Annual deposit 48,000.00 Annual retirement withdrawal 30,000.00 Year

Question

Interest 8%

Annual deposit 48,000.00

Annual retirement withdrawal 30,000.00

Year Account balance, beginning of year" "Deposit at beginning of year" "Interest earned during year" "Total in account, end year"

1 48,000.00

2 48,000.00

3 48,000.00

4 48,000.00

5 48,000.00

6 -30,000.00

7 -30,000.00

8 -30,000.00

9 -30,000.00

10 -30,000.00

11 -30,000.00

12 -30,000.00

13 -30,000.00

Note: This problem has 5 deposits and 8 annual withdrawals, all made at the beginning of the year. The beginning of year 13 is the last year of the retirement plan; if the annual deposit is correctly computed, the balance at the beginning of year 13 after the withdrawal should be zero.

Explanation / Answer

Ans. The question has been solved using CMPD function of Financial calculator FC-200V.

Step 1. Calculate the present value of the withdrwals to be made starting from Year 6 till Year 13

Set Mode as Begin, n=8, I=8%, PMT=-30,000, P/Y=1/C/Y=1, PV=?

Solve for PV.

PV = 186191.1018

The present value calculated above is the future value (of the annual payments made)at beginning of year 6 or end of Year 5.

Step 2. Calculate the annual payment to be made every year (from Year 1 to 5) to accumulate the future value of $186191.1018

Set Mode as Begin, n =5, I=8%, FV= 186191.1018, PMT=?

Solve for PMT.

PMT = 29386.551

The annual deposit to be made so that $29,386.551

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.