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26 September, 11:42

How much money should be deposited annually in a bank account for five years if you wish to withdraw $5 comma 500 each year for three years, beginning five years after the last deposit? The interest rate is 4 % per year.

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  1. 26 September, 13:44
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    The initial deposit should be $ 25.46

    Explanation:

    The Annuity formula is

    P=R [1 - (1+i) ^-n/i]⋅ (1+i)

    Where

    P = Initial deposit

    R=Regular Withdraw amount

    i=Interest rate

    n=Number of years/periods

    After entering corresponding values in the formula we get $25.46

    so P (which is our initial deposit) = 25.46
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