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You are considering an investment opportunity that offers an APR of 8%, compounded quarterly. You wish to invest an equal amount quarterly for ten years. Beginning the first quarter of year eleven you plan on making equal quarterly withdrawals.

a. What is the maximum equal quarterly withdrawal you (and your heirs) could make in perpetuity (forever)? Express the answer as a function of your equal quarterly investments.

b. If you planned quarterly withdrawals equal to 150% of your quarterly deposits until the investment account balance was zero, for how many quarters would you be able to make such withdrawals?

Suppose that the rate of return on the investment fell to 6%, compounded Quarterly, after ten years -- just after your final deposit!

c. What is the maximum equal quarterly withdrawal you (and your heirs) could make in perpetuity (forever)? Express the answer as a function of your equal quarterly investments

d. If you planned quarterly withdrawals equal to 150% of your quarterly deposits until the investment account balance was zero, for how many quarters would you be able to make such withdrawals?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92754418

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