How much money should be deposited annually in a bank account for five years if you wish to withdraw $5 comma 500 each year for three years, beginning five years after the last deposit? The interest rate is 4 % per year.

Question

Business

Araceli Vazquez

10 May, 13:47

How much money should be deposited annually in a bank account for five years if you wish to withdraw $5 comma 500 each year for three years, beginning five years after the last deposit? The interest rate is 4 % per year.

+5

Answers (1)

Know the Answer?

Rebekah · Answer 1

The initial deposit should be $ 25.46

Explanation:

The Annuity formula is

P=R [1 - (1+i) ^-n/i]⋅ (1+i)

Where

P = Initial deposit

R=Regular Withdraw amount

i=Interest rate

n=Number of years/periods

After entering corresponding values in the formula we get $25.46

so P (which is our initial deposit) = 25.46