Derek wants to withdraw $11,575.00 from his account 3.00 years from today and $13,908.00 from his...

Derek wants to withdraw $11,575.00 from his account 3.00 years from today and $13,908.00 from his account 12.00 years from today. He currently has $2,838.00 in the account. How much must he deposit each year for the next 12.0 years? Assume a 6.69% interest rate. His account must equal zero by year 12.0 but may be negative prior to that. Currency: Round to: 2 decimal places.

Solutions

Expert Solution

rate = 6.69%

nper = 3

PMT = 0

FV = $11575

Using Excel :

PV = pv(rate,nper,pmt,pv,fv)

= pv(6.69%,3,0,-11575)

= $9531.25

rate = 6.69%

nper= 12

PMT = 0

FV = $13908

PV = pv(rate,nper,pmt,pv,fv)

= pv(6.69%,12,0,-13908)

= $6394.11

Rate = 6.69%

Nper = 12

PV = $9531.25+$6394.11-$2838 = $18763.36

FV = 0

PMT = pmt(rate,nper,pv,fv)

= pmt(6.69%,12,-18763.36,0)

= $2323.47

He must deposit $2323.47 each for the next 12 years

jeff jeffy answered 2 years ago

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