Question
You anticipate multiple home-remodeling expenditures over the next six years. Your plan is to put some money into an account today and then make periodic
You anticipate multiple home-remodeling expenditures over the next six years. Your plan is to put some money into an account today and then make periodic withdrawals to exactly cover your expenditures. The account offers a rate of return of 4% / year. The timings and sizes of your anticipated expenditures are these: $9900 in one year, $8000 two years from today, $6000 at t = 3 years, and $7000 in six years. In order to perfectly cover these expenditures and be left with $0 in the account after the final withdrawal, ow much do you need to deposit into the account today? [To draw a timeline, as we covered in class this/last week, will help you to organize your work and recognize the right number of times to compound each cash flow.]
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