SOLUTION: How much should be invested each year for 10 years to provide you with $4000 per year for the next 15 years? Assume a 4.6% interest rate. (Round your final answer to two decimal pl

Question 1131692: How much should be invested each year for 10 years to provide you with $4000 per year for the next 15 years? Assume a 4.6% interest rate. (Round your final answer to two decimal places.)

Found 2 solutions by josmiceli, MathTherapy:
Answer by josmiceli(19441) (Show Source): You can put this solution on YOUR website!
Simple interest formula

is
for each year

$5,736.14 must be invested each year
for 10 yrs
-------------------
check:
interest
earned for 1 year

OK
Get a 2nd opinion if needed

Answer by MathTherapy(10559) (Show Source): You can put this solution on YOUR website!

How much should be invested each year for 10 years to provide you with $4000 per year for the next 15 years? Assume a 4.6% interest rate. (Round your final answer to two decimal places.)

You DIDN'T state a compounding period. You need to if you want a correct answer.
Assuming it's compounded annually, you'll need to withdraw $4,000 per year for 15 years, at an annual interest rate of 4.6%.
To acquire this $42,664.36, you'll need to invest for 10 years, at an annual interest rate of 4.6%.
In other words, you start today and deposit $3,455.85 every year for 10 years. After 10 years you will have $42,664.36, and you'll have
enough to withdraw $4,000 per year for 25 years after that, at 4.6% annual interest rate.
JOSMICELI is doing these types of problems WRONG!
The FORMER calculation is based on AMORTIZATION, while the LATTER involves finding the PAYMENT based on a FUTURE VALUE of an ORDINARY annuity amount.
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