How much money should be deposited annually in a bank account for five years if you wish to withdraw $3 comma 000 each year for three years, beginning five years after the last deposit? The interest rate is 4% per year.

The five deposits will be for   $ 1,263.360

Explanation:

at the given rate of 4%

we are going to do 5 deposits.

Then, after 5 years we subtract 3,000 dollar during 3 years:

First, we solve for the PV of tat annuity:

C3,000.00

time3

rate         0.04

PV$8,325.2731

Then, we discount for the 5 years waiting period:

Maturity  $8,325.2731

time  5.00

rate  0.04000

PV   6,842.7676

Now, we solve for which annuity of 5 deposits generates that amount:

FV6,843

time5

rate    0.04

C  $ 1,263.360

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