4.5a.NOTE: Please show all calculations (no Excel solutions please) to

QUESTION

4.5a.NOTE: Please show all calculations (no Excel solutions please) to four decimal places if applicable: Jane is 20 years old today. Jane is going to put $1,000 into her savings account on her 21st birthday and again on every birthday for 20 payments (i.e., till her 40th birthday). She will earn 5%¦
Here we have PMT=$1000, no of payments n=20, i=5% a. Here we have to calculate FV of Ordinary annuity FV of annuity of n=20, PMT=$1000 FVA = PMT(FVIFAi,n) = 1000*(FVIFA5%,20) = 1000*33.06595= $33,065.95 b. Here we have to calculate PMT for n=20, PVA=33065.95 & FV=0 with i=5% PV¦

of annuity of n=20 PVA = PMT(PVIFAi,n) = PMT*(PVIFA5%,20)=PMT*12.4622 = 33065.95 ie PMT = 33065.95/12.4622 = $2,653.30 So she can withdraw $2,653.30 each year from 41st Bday to 60th Bday

ANSWER:

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