In order to withdraw $400 at the end of each year for seven years, what...

To determine the amount that should be deposited today to allow for $400 withdrawals at the end of each year for 7 years at a 6% interest rate, use the present value of an annuity formula:

PV=A×((1−(1+i)−n)i)PV = A \times \left(\frac{(1 - (1 + i)^{-n})}{i}\right)PV=A×(i(1−(1+i)−n)​)

Where:

PVPVPV is the present value (amount to deposit)

AAA is the annual withdrawal ($400)

iii is the interest rate (6% or 0.06)

nnn is the number of periods (7 years)

PV=400×(1−(1+0.06)−70.06)≈2,233PV = 400 \times \left(\frac{1 - (1 + 0.06)^{-7}}{0.06}\right) \approx 2,233PV=400×(0.061−(1+0.06)−7​)≈2,233