Question

Derek wants to withdraw $13,890.00 from his account 3.00 years from today and $12,808.00 from his account 15.00 years from today. He currently has $2,268.00 in the account. How much must he deposit each year for the next 15.0 years? Assume a 5.06% interest rate. His account must equal zero by year 15.0 but may be negative prior to that.

Answer format: Currency: Round to: 2 decimal places.

Derek currently has $13,029.00 in an account that pays 4.00%. He will withdraw $5,072.00 every other year beginning next year until he has taken 6.00 withdrawals. He will deposit $13029.0 every other year beginning two years from today until he has made 6.0 deposits. How much will be in the account 24.00 years from today?

Answer format: Currency: Round to: 2 decimal places.

Derek can deposit $294.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 12.00% and compounds interest monthly. Derek can deposit $2,445.00 per year for the next 10 years into an account at Bank B. The first deposit will be made next year. Bank B compounds interest annually. What rate must Bank B pay for Derek to have the same amount in both accounts after 10 years?

Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434))

Assume the real rate of interest is 4.00% and the inflation rate is 3.00%. What is the value today of receiving 11,104.00 in 15.00 years?

Answer format: Currency: Round to: 2 decimal places.

Answer 1

The computation of the amount deposited per year i.e. PMT is shown below:

But before that first determine the two present values by using the following formulas

In the first case, the present value is

RATE = 5.06%
N = 3
PMT = 0
FV = $13,890

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formual, the present value is $11,978.16

In the seond case, the present value is

RATE = 5.06%
N = 15
PMT = 0
FV = $12,808

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formual, the present value is $6,108.30

Now the monthly payment or PMT is

RATE = 5.06%
N = 15
PV = $11,978.16 + $6,108.30 - $2,268 = $15,818.46
FV = $0

= PMT(Rate;NPER;-PV;FV;type)

The present value comes in negative

So, after applying the above formual, the monthly payment is $1,530.17