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How Much Should Be Deposited Now If You Wish to Withdraw

question 263

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How much should be deposited now if you wish to withdraw $2,000 quarterly in perpetuity? Interest is 3.95% compounded quarterly.


Definitions:

Average Total Cost

The total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.

Marginal Cost Curve

A graph that shows the change in the total cost of producing one additional unit of a good or service.

Diminishing Marginal Product

The principle that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit decreases.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a product changes as production volume increases.

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