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13. Josiah would like to set up an account to provide for some retirement funding. He plans to retire in 30 years and can invest in an account paying 7%. Because he plans to do some traveling during the first ten years of his retirement, he would like to have enough money to begin withdrawing $5,000 per year at the beginning of each year. The first withdrawal would occur at the beginning of the 31st year. At retirement he would also like to move the funds to a safer account that might pay only 5%. How much must he now deposit in his 7% account to accomplish his dream?

Respuesta :

Answer:

$6568.36

Explanation:

Money he wishes to have in future is $50 000 as he wishes to withdraw $5000 at the beginning on each year for the first ten years

$5000*10= $50000

Present value = FV/ (1+r)^n

                         50000/(1+0.07)^30

                        =$6568.36

Therefore he must invest 6568.36

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