Answer:
The amount that would need to be deposited now to withdraw $2,400 at the end of each year for 10 years from an account that earns 4% compounded annually is $60,058.50.
Explanation:
To determine how much would need to be deposited now to withdraw $2,400 at the end of each year for 10 years from an account that earns 4% compounded annually, we can use the present value formula for an annuity:
PMT x [(1 - (1 + r/n)^(-nt)) / (r/n)] = PV
Where:
PMT = the periodic payment
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the total number of years
PV = the present value (the amount to be deposited now)
In this case, we have:
PMT = $2,400
r = 4% = 0.04 (decimal)
n = 1 (compounded annually)
t = 10 years
Plugging these values into the formula, we get:
PV = $2,400 x [(1 - (1 + 0.04/1)^(-1*10)) / (0.04/1)]
PV = $2,400 x [(1 - 0.5537) / 0.04]
PV = $60,058.50
Therefore, the amount that would need to be deposited now to withdraw $2,400 at the end of each year for 10 years from an account that earns 4% compounded annually is $60,058.50.
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