Question
a) You invest 10000$ in a savings account today at j1 = 5%. At the end of each year you withdraw exactly 500$ from the
a) You invest 10000$ in a savings account today at j1 = 5%. At the end of each year you withdraw exactly 500$ from the account. What is the account balance at the end of year 15?
b) Let us assume that instead of withdrawing 500$ at the end of each year, you withdraw 500$ at the end of year 1, 550$ at the end of year 2, 600$ at the end of year 3, and so on (increasing the size of the annual withdrawal by 50$ each year with respect to the previous year). What is the account balance at the end of year 10? In which year does the account balance reach zero? Use linear interpolation to solve, using 15years & 20years to set up the interpolation.
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