What is the amount of ten equal annual deposits that can provide five annualwithdrawals, where the first withdrawal of $2,000 is made at the end of year land subsequent withdrawals increase at the rate of 5% per year over the previous year's if the interest rate is 7% compounded annually?(a) $745(b)$652(c) $1,000(d) $1,563
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
What is the amount of ten equal annual deposits that can provide five annual
withdrawals, where the first withdrawal of $2,000 is made at the end of year land subsequent withdrawals increase at the rate of 5% per year over the previous year's if the interest rate is 7% compounded annually?
(a) $745
(b)$652
(c) $1,000
(d) $1,563
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