Suppose you were given $4,000 today and deposited it into an account paying 8% per year, compounded monthly. If you know that you will need $5,000 in the account 6 years from now, what monthly withdrawal can you make from the account, beginning one month from now, that will leave the account with exactly
$5,000 in it in 6 years?
Click on the arrows to vote for the correct answer
A. B. C. D. E.B
On the BAII Plus, press 72 N, 8 divide 12 = I/Y, 4000 PV, 5000 +/- FV, CPT PMT. On the HP12C, press 72 n, 8 ENTER 12 divide i, 4000 PV, 5000 CHS FV, PMT.
Note that the answer is a negative number. This is because it is a withdrawal from the account balance, just as the $5,000 is. It is a very small value because most of the $4,000 is needed to ensure there is $5,000 in the account in 6 years! Make sure the BAII Plus has the value of P/Y set to 1.