Answer:
Explanation:
The timeline would be as follows:
During the first 10 years, we deposit 5,000 at 7% market rate.
Then we withdraw at the beginning of Year eleven during 17 year. The market price for this period is 6%
First Step amount at end of year 10
[tex]C * \frac{(1+r)^{time} - 1 }{rate} = FV\\[/tex]
[tex]5,000 * \frac{(1+0.07)^{10} - 1 }{0.07} = FV\\[/tex]
FV = $69,082.24
Then, we are going to calculate how much can be withdraw during 17 years
At the beginning of the period at 6% rate
[tex]C = PV \frac{rate}{1-(1+rate)^{-time} }/ (1+rate)[/tex]
From the PV formula, we clear the Cuota and then we divide by 1.06 because we are doing an annuity-due. The amount is withdraw at the beginning of the period. That's why we add a new element.
[tex]C = 69,082.24 \frac{0.06}{1-(1.06)^{-17} } /(1.06)[/tex]
C = 6220.32
