Question

How much do you have to deposit today in order to allow 5 annual withdrawals, beginning at the end of year 8, with the first withdrawal of $1000 with subsequent withdrawals decrease at the rate of 5% over previous year's withdrawal? The interest rate is 10%. Enter your answer as follow: "123456", do not use "$" or ",". 3508.64 Hint: Draw a cash flow diagram. Try to solve this problem in two parts. - Is this a linear gradient or a geometric gradient? - If this is a linear gradient, remember that the equation applies to increasing gradient only. - If this is a geometric gradient, then the equation applies for both increasing and decreasing gradient. When using it for decreasing gradient, remember to set the g to a negative value. - Remember that the P always occurs one time period before the first repeated cash flow (either A or G).

          How much do you have to deposit today in order to allow 5 annual withdrawals, beginning at the
end of year 8, with the first withdrawal of $1000 with subsequent withdrawals decrease at the
rate of 5% over previous year's withdrawal? The interest rate is 10%.
Enter your answer as follow: "123456", do not use "$" or ",".
3508.64
Hint:
Draw a cash flow diagram.
Try to solve this problem in two parts.
- Is this a linear gradient or a geometric gradient?
- If this is a linear gradient, remember that the equation applies to increasing gradient
only.
- If this is a geometric gradient, then the equation applies for both increasing and
decreasing gradient. When using it for decreasing gradient, remember to set the g to a
negative value.
- Remember that the P always occurs one time period before the first repeated cash flow
(either A or G).

How much do you have to deposit today in order to allow 5 annual withdrawals, beginning at the
end of year 8, with the first withdrawal of 1000 with subsequent withdrawals decrease at the
rate of 5% over previous year's withdrawal? The interest rate is 10%.
Enter your answer as follow: "123456", do not use "" or ",".
3508.64
Hint:
Draw a cash flow diagram.
Try to solve this problem in two parts.
- Is this a linear gradient or a geometric gradient?
- If this is a linear gradient, remember that the equation applies to increasing gradient
only.
- If this is a geometric gradient, then the equation applies for both increasing and
decreasing gradient. When using it for decreasing gradient, remember to set the g to a
negative value.
- Remember that the P always occurs one time period before the first repeated cash flow
(either A or G).

Added by Shaun P.

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