Mr. Yiu just wins a lottery of $6,261,362 today. He opens a bank account and puts the whole amount in the bank account which gives him 3.4% p.a. interest rate. He will withdraw $100,000 from the account today. From next year onwards he will withdraw an amount that is 10% more than the previous year's amount. That means he will withdraw $100,000 x (1+10%) next year, and $100,000 x (1+10%)? two years later and $100,000 x (1+10%)³ three years later, and so on. (Hint: This is similar to the education fund question.) A. Based on Mr. Yiu's withdrawal plan above, calculate the number of years he can withdraw money from the account.
Mr. Yiu just wins a lottery of $6,261,362 today. He opens a bank account and puts the whole amount in the bank account which gives him 3.4% p.a. interest rate. He will withdraw $100,000 from the account today. From next year onwards he will withdraw an amount that is 10% more than the previous year's amount. That means he will withdraw $100,000 x (1+10%) next year, and $100,000 x (1+10%)? two years later and $100,000 x (1+10%)³ three years later, and so on. (Hint: This is similar to the education fund question.) A. Based on Mr. Yiu's withdrawal plan above, calculate the number of years he can withdraw money from the account.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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calculate the number of years he can withdraw money from the account.
Transcribed Image Text:Mr. Yiu just wins a lottery of $6,261,362 today. He opens a bank account and puts the whole
amount in the bank account which gives him 3.4% p.a. interest rate.
He will withdraw $100,000 from the account today. From next year onwards he will
withdraw an amount that is 10% more than the previous year's amount. That means he will
withdraw $100,000 x (1+10%) next year, and $100,000 x (1+10%)? two years later and
$100,000 x (1+10%)³ three years later, and so on. (Hint: This is similar to the education fund
question.)
A. Based on Mr. Yiu's withdrawal plan above, calculate the number of years he can
withdraw money from the account.
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