If $10,000 is invested today in an account that earns interest at a rate of 9.5%,@what is the value of the equal withdrawals that can be taken out of the account at the end of each of the next five years if the investor plans to deplete the account at the end of the time period? A $2000 B $2453 C $2604 D $2750 Answer is C. based on PV=10,000 I/Y=9.5 N=5, FV=0. What confuses me is why N=5 and not 25 as the withdrawal will be made over 25 years with interest is accruing at an annual rate of 9.5%??? any ideas?
why would the withdrawals be made over 25 years? Question says 5 years. I think you are not reading carefully
question says “at the end of each of the next five years” and not “at the end of 5 years”. Maybe this is more of an english question!
what they mean is at the end of year 1,2 ,3,4,5
thanks Florinpop.