I have this practice problem. How much should you deposit today in order to withdraw $5,000 each year for 7 years?
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I have this practice problem.


How much should you deposit today in order to withdraw $5,000

each year for 7 years? Your first withdraw will start 5 year from now and your deposit will earn 4% interest.

 

So far I have :


PV: ? FV: $35,000 PMT: $5,000 i: 4% n: ?


So I am solving for Present Value. If I am withdrawing for 7 years and first withdrawal starts 5 years from now, doesn't that give me 11 periods? Because the fifth year of growth and the first year of withdrawals overlap.


Also, is the interest accruing for the full 11 years? or just the first 5 years until the first withdrawal?


Thank You!

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