How much would you need to deposit now in a savings account that earns 5% interest,compounded annually,in order to withdraw $5,000 at the end of every year for ten years? (Future Value of $1,Present Value of $1,Future Value Annuity of $1,Present Value Annuity of $1. )(Use appropriate factor from the PV tables.Round your final answer to the nearest dollar amount. )

Question

Quizplus · Accepted Answer

To find the present value of an annuity, you use the Present Value Annuity of $1 factor. For a 5% interest rate over 10 years, the factor is approximately 7.7217. Multiply this factor by the annual withdrawal amount ($5,000) to find the initial deposit needed: $5,000 * 7.7217 = $38,609.

How Much Would You Need to Deposit Now in a Savings