Derek wants to withdraw $11,935.00 from his account 4.00 years from today and $13,226.00 from his...

Derek wants to withdraw $11,935.00 from his account 4.00 years from today and $13,226.00 from his account 14.00 years from today. He currently has $2,428.00 in the account. How much must he deposit each year for the next 14.0 years? Assume a 5.06% interest rate. His account must equal zero by year 14.0 but may be negative prior to that.

Expert Solution

Let present value of level annuity be X,

So,

2,428 + X = 11,935/(1.0506)⁴ + 13,226/(1.0506)¹⁴

X = $13,995.36

Calculating Annual Deposit required,

Using TVM Calculation,

PMT = [PV = 13,995.36, FV = 0, N = 14, I = 0.0506]

PMT = $711.13

Annual Deposit = $711.13

jeff jeffy answered 2 years ago

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