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Economics

Question: An investor has a principal amount of $P. If he desires a payout (return) of 0.1P each year, how many years will it take to deplete an account that earns 8% per year?

0.1P = P(A/P, 8%, N), so N ≅ 21 years.

A payout duration table can be constructed for select payout percentages and compound interest rates. Complete the following table. (Note: table entries are years.) Summarize your conclusions about the pattern observed in the table.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M92314690

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