Final answer:
The present worth of annual deposits and withdrawals at a 3.66% interest rate is calculated using Net Present Value, taking into account the timing of each cash flow. Examples provided illustrate how present values are adjusted by discount rates through the use of the present value formula. Accurate calculations would typically require a financial calculator or software.
Step-by-step explanation:
To determine the present worth of a series of deposits and withdrawals with differing timeframes at an interest rate of 3.66%, one must use the concept of net present value (NPV). For the deposits made annually from years 6 through 20, the present value of each deposit is calculated using the formula for the present value of an annuity. In contrast, the withdrawals from years 3 through 25 are treated as negative cash flows affecting the total present worth.
An example to understand this would be considering a simple two-year bond with an 8% interest rate and a principle of $3,000. At an 8% discount rate, the first year's interest of $240 would be worth $240 / (1+0.08) and the second year's interest plus the principal would be worth ($240 + $3000) / (1+0.08)^2. If interest rates rise and the discount rate is 11%, the present value changes accordingly due to the higher discounting factor.
Since the student's question is complex due to the changing timeframes for deposits and withdrawals, a financial calculator or appropriate financial software would typically be used to determine the precise present worth, taking into account the timing of each cash flow and applying the appropriate present value factors for each period at the given interest rate.