a. If she invest it at 8% compounded annually and takes nothing out, how much will she have at the end of 20 years?

b. If she take out $50,000 to but a car and invest the remainder at 8% compounded annually and takes nothing else out, how much will she have at the end of 20 years?

c. If she invest it at 8% compounded annually and takes out $75,000 today and $70,000 at the end of every year thereafter. How much will she have at the end of 20 years?

d. If she invest it at 8% compounded annually and takes out $75,000 today and $70,000 at the end of every year thereafter, when will she get the last payment?

e. What rate of interest would she need to take out $75,000 today and $70,000 at the end of every year for 20 years?

Please refer attached file for clarity of formulas in MS Excel format.

a. If she invest it at 8% compounded annually and takes nothing out, how much will she have at the end of 20 years?

Inherited amount=T=$750,000
Used amount=U=0
Balance=PV=T-U=$750,000
Annual withdrawl=PMT=0
Rate of interest=RATE=8%
Number of periods=NPER=20
Type of payment=TYPE=0 End of period with drawls
Future Value=FV=?

We can use FV function in MS Excel to get the value at the end of 20 years

b. If she take out $50,000 to but a car and invest the remainder at 8% compounded annually and takes nothing else out, how much will she have at the end of 20 ...

Solution Summary

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