Solution for Problem 9.3.2

You want to deposit enough money into the bank so that you can withdraw $10,000 at the end of each month for 10 years.  If the banks pays 9% interest compounded monthly, how much money should you deposit?

Solve

       Step

i = 0.9 12 = 0.0075 

k = 12, r = 0.09, Monthly means 12 times a year

P is payment = 10,000 
n
= 10 years 
Find the Present Value

You would have to deposit $789,416.93 so that you can withdraw $10,000 a month for 10 years.
Enter 10,000 ( 1 - 1.0075 xy - 120 )   .0075  [enter or =] in your calculator
Hint: don't round until you are completely finished with your calculations.