$30,000 is placed in a fund earning 7% compounded quarterly. How many quarterly withdrawals of $2,000 can be made if the first withdrawal occurs three years from today? Count the final withdrawal, which will be less than $2,000.

Compounded quarterly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, applied every three months.

Quarterly withdrawals

The act of taking out money from a financial account or investment four times a year, often at the end of each fiscal quarter.

Achieve an understanding and apply the time value of money theories to calculate present and future valuations of different monetary instruments.
Determine the fiscal value of annuities and perpetuities, factoring in ordinary annuities, annuities due, deferred annuities, and perpetuities, under varying compounding frequencies.
Apply formulas pertaining to compound interest to deal with issues in savings, loans, and investment scenarios.

Verified Answer

Final Answer :

23 withdrawals

Learning Objectives

Achieve an understanding and apply the time value of money theories to calculate present and future valuations of different monetary instruments.
Determine the fiscal value of annuities and perpetuities, factoring in ordinary annuities, annuities due, deferred annuities, and perpetuities, under varying compounding frequencies.
Apply formulas pertaining to compound interest to deal with issues in savings, loans, and investment scenarios.