Engineering Economics Blog

You plan to make a lump-sum deposit of $5000 now into an investment account that pays 6% per year, and you plan to withdraw an equal end-of-year amount of $1000 for 5 years, starting next year. At the end of the sixth year, you plan to close your account by withdrawing the remaining money. Defi ne the engineering economy symbols involved.

Solution

All  fi  ve symbols are present, but the future value in year 6 is the unknown.
   
P = $5000
A = $1000 per year for 5 years
F = ? at end of year 6
i  =  6% per year
n = 5 years for the A series and 6 for the  Fvalue