At time t = 0, Paul deposits P into a fund crediting interest at an effective annual interest rate…

Question:

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At time t = 0, Paul deposits P into a

fund crediting interest at an

effective annual interest rate of

7.8%. At the end of each year in

years 9 through 24, Paul withdraws

an amount sufficient to purchase an

annuity-due of 110 per month for 7

years at a nominal interest rate of

6.6% compounded monthly.

Immediately after the withdrawal at

the end of year 24, the fund value is

zero.

Calculate P. [3.a-c #04]

Expert Answer:

Answer rating: 100% (QA)

The effective annual interest rate of the fund is 7 8 so the month

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