Question

In: Economics

What is the amount of six equal annual deposits that can provide ten annual withdrawals, where...

What is the amount of six equal annual deposits that can provide ten annual withdrawals, where a first withdrawal of $22332 is made at the end of year seven and subsequent withdrawals increase at $2092 over the previous year, at an interest rate of 5% compounded annually?

Solutions

Expert Solution

We are given withdrawal as 22332, and increment in the withdrwal is 2092. Rate of interest is 5%. We are not given what amount was given as the annual deposit for 6 years. In tota we have 16 yeras.

If we solve using excel. We can use the goad seek funtion which is under the data tab. We need to make the last value of the withdrawal as zero by changing the withdrawal value. the working is provided in the down.


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