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An amount P is deposited now so that an equal annual amount of A1=2000 per year for the first 5 years, starting 1year after the deposit. And a different annual withdrawal of A2= 3000 per year for the following 3 years. Draw the cash flow diagram if i=8.5% per year.

Sagot :

Parrain

Based on the amounts to be withdrawn over the years and the interest rate, the amount deposited now is $12,977.

How much is deposited now?

This can be found as:
= (2,000 x Present value of annuity interest factor, 8.5%, 5 years) + (3,000 x Present value of annuity interest factor, 8.5%, 8 years) - (P/A, 8.5%,  5 years)

= (2,000 x 3.9406) + (3,000 x (5.6392 - 3.94064))

= $12,977

The cashflow diagram is attached.

Find out more on cashflow diagrams at https://brainly.com/question/23841852.

View image Parrain
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