Subsequent withdrawals decrease at the rate

Assignment Help Business Economics

Reference no: EM131098389

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%.

Reference no: EM131098389

Questions Cloud

Price elasticity of demand for cigarettes : According to studies undertaken by the US Department of Agriculture, the price elasticity of demand for cigarettes is between – 0.3 and – 0.4 and the income elasticity is about + 0.5. Suppose a major brokerage firm advised its clients to buy cigarett..

The lifetime of traditional light bulbs measured : The lifetime of traditional light bulbs measured in hours is known to be normally distributed with μ=100 and σ=20. What is the probability that a randomly selected traditional light bulb will have a lifetime of 85 hours or longer?

Which do you believe is the most effective strategy : In order to reduce the unemployment rate jobs must be created... new jobs! Both the Federal Reserve and government have proposed a number of solutions and programs in order to create these jobs. In your opinion which do you believe is the most effect..

Assumed about the elasticity of demand for transit services : The Metropolitan Transit System recently announced a 50% increase in the price of a transit ticket. The administrators said that they needed an increase in revenue to cover their rising costs. Explain the economic rationale for this decision. In your..

Subsequent withdrawals decrease at the rate : 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..

Relative prices affect afirm long run expansion path : Suppose the recent recession led to a drop in wages such that the price of labor fell by 25 percent.Economists predict that this drop will be sustained in the long run. Furthermore, the user cost ofcapital has not changed, nor is it predicted to. How..

Is the feds funds rate currently too high or too low : Suppose the economy is thought to be 1 percent above potential (i.e., the output gap is 1 percent), when potential output grows 3 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 3 percent over the past year. ..

Price with the average production cost of the plant : An old 100-MW power plant has a heat rate of 13 000 Btu/kWh and burns a fuel that costs 2.90 $/MBtu. The owner of the plant estimates the fixed cost of keeping the plant available at $360 000 per year. What is the minimum price that would justify kee..

An entrepreneur needs funds for project : An entrepreneur needs funds for a project. He has funds of his own, but enough to cover the required investment of $100. If the entrepreneur doesn’t misbehave, the project will succeed with probability .9, yielding a gross return of 120 in one year. ..

User Account

All Pages