What is the amount of five equal annual deposits that can pr

What is the amount of five equal annual deposits that can provide five annual withdrawals, where a first withdrawal of $1500 is made at the end of year six and subsequent withdrawals increase at $100 over the previous year\'s, in the interest rate of 10% compounded annually?

Solution

First of all we will calculate the present value of the withdrawals = 1500/(1.10)^1 + 1600/(1.10)^2 + 1700/(1.10)^3 + 1800/(1.10)^4+1900/(1.10)^5 = $6372.36

this is the value at the end of the five years. so we can refer that as the future value

Future value = $6372.36

years = 5

interest = 10%

present value = 0

per year annual deposits should be $1,043.78

i have calculated this value using financial calculator

so in that you need to put all values as given in above and then click on on PMT function you will get the value of $1043.78