An agricultural corporation that paid 53% in income tax wanted to build a grain elevator designed to last twenty-five (25) years at a cost of $80,000…

To find the value of equal year-end withdrawals made for 10 years with an initial investment of $50

at 6% interest, you use the annuity formula:

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

Where:

AAA is the annuity payment (annual withdrawal)

PVPVPV is the present value ($50)

iii is the interest rate (6% or 0.06)

nnn is the number of periods (10 years)

A=50×0.06×(1+0.06)10(1+0.06)10−1≈5.35A = \frac{50 \times 0.06 \times (1 + 0.06)^{10}}{(1 +

0.06)^{10} - 1} \approx 5.35A=(1+0.06)10−150×0.06×(1+0.06)10 ≈5.35