Suppose you wish to make 28 regular annual withdrawals from your bank account for the next...

Suppose you wish to make 28 regular annual withdrawals from your bank account for the next 28 years. All the withdrawals will be of the amount of $1,543. You plan to make the first withdrawal a year from now, the second one two year from now, the third one three years from now, and so on. In order to make these withdrawals possible, what is the least amount of money that you need to have in the account right now? The bank pays 7.6% annual compounding interest. Round your answer to the nearest $1, i.e., round to a whole number.

Expert Solution

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=1,543[1-(1.076)^-28]/0.076

=1,543*11.4657293

which is equal to

=$17692(Approx)

jeff jeffy answered 2 years ago

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