Question
This problem consists of three independent parts relating to Companies X, Y, and Z: Company X invested $37,368 at the beginning of Year 1. The
This problem consists of three independent parts relating to Companies X, Y, and Z:
Company X invested $37,368 at the beginning of Year 1. The amount on deposit earned interest at 10% per year. The company plans to withdraw the amount on deposit in three equal annual installments starting on December 31, Year 4.
Company Y wishes to accumulate a fund of $58,666 at the end of five years by making five equal annual deposits starting one year from now. The fund will earn interest at 8% compounded annually.
Company Z invested $199,635 at the beginning of Year 1 at 8% compounded annually, The amount invested and accrued interest are to be withdrawn in five equal installments starting on December 31, Year 1.
Instructions
a Compute the three equal amounts that Company X can withdraw and prepare a table which shows that the entire amount on deposit will have been withdrawn by December 31. Year 6,
b Compute the annual deposits that Company Y should make and prepare a fund accumulation table for the five-year period.
c Compute the amounts Company Z can withdraw each year and prepare a table that illustrates that the funds on deposit will be completely exhausted by December 31, Year 5.
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