Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Consider an investment portfolio that earns, on average, 0.05% interest each month. (a) If the initial deposit is $100,000, what is the amount that

image text in transcribed
1. Consider an investment portfolio that earns, on average, 0.05% interest each month. (a) If the initial deposit is $100,000, what is the amount that can be drawn each month from the account (rounded to the nearest cent) such that it reaches zero after 20 years? Compute this amount and prove your answer is correct by graphing it in your notebook, as well as displaying the certificate amount in the last month to prove it has been approximately fully drained. (b) Determine what initial deposit you would need to make in order to be able to draw $1000 per month and remain in equilibrium. Compute this amount and prove your answer is correct by graphing it in your notebook. Additionally, graph what happens if you initially deposit both $100 less and $100 more than this amount but still withdraw $1000 per month. What is the exact amount left on the certificate at the end of 20 years for these two cases? Graph all three results on the same graph and discuss

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Macroeconomics

Authors: Frank, Bernanke, Antonovics, Heffetz

3rd Edition

1259117162, 9781259117169

More Books

Students also viewed these Finance questions