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8 September, 14:07

Your grandmother just died and left you $47,500 in a trust fund that pays 6.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account?

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  1. 8 September, 14:10
    0
    X = 13019.136

    Explanation:

    Use calculator to solve for X.

    47,500 = X (1 - (1.065) ^-4) / (.065 / 1.065)

    set financial calculator to an annuity due setting

    N = 4

    I / Y = 6.5

    PV = - 47,500

    FV = 0

    CPT PMT

    payments = 13019.136
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