Please answer all parts including how much the overall earned interest is. Suppo

Question

Please answer all parts including how much the overall earned interest is.

Suppose you have an opportunity to invest in und hat pays 15% interest compounded annually Today, you invest $15,000 nto his und. Three years later EOY 3), you borrow $7500 om local bnk a 9% annual interes and invest it in the und Two years ter EOY 5 ou withdrew enough repay the bank oan and all interest due on it. Three years from this withdrawal (EOY 8) you start taking $3,000 per year out of the fund. After five withdrawals of S3,000, you have withdrawn your original S15,000. The amount remaining in the furnd is earned interest. How much remains? money from the fund to Cick the icon to view tne interest and annuity table tor discrete compounding when-9% per yea Click the icon to vic the interest and annuity table for discrete compoun ng when -15% per year. The arnount wilhdrawned al bhe EOY 5 is SRound lo the neaesl dollar)

Explanation / Answer

Value of loan EOY5 = Original amount x (1 + rate)^n

= 7,500 x (1 + 9%)^2 = $8,910.75

which is the amount that should be withdrawn in EOY5

Remaining value in the fund in EOY5

= 15,000 x (1 + 15%)^5 + 7,500 x [(1 + 15%)^2 - (1 + 9%)^2]

= $31,178.36

Its value in EOY8 = 31,178.36 x (1 + 15%)^3 = $47,418.38

After first withdrawal, value = 47,41.38 - 3,000 = $44,418.38

After second withdrawal, value = 44,418.38 x (1 + 15%) - 3,000 = $48,081.44

After third withdrawal, value = 48,081.44 x (1 + 15%) - 3,000 = $52,293.31

After fourth withdrawal, value = 52,293.31 x (1 + 15%) - 3,000 = $57,137.31

After fifth withdrawal, value = 57,137.31 x (1 + 15%) - 3,000 = $62,707.91 = Overall earned interest

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