# How to make a timeline in given problem?

How much money should be deposited each year for 12 years if you wish to withdraw $309 each year for five years, beginning at the end of the 14th year? Let i = 8% per year. In the problem what does "end of 14th year" refer to? Will that amount remaining will compound interest when deposited at the "end of 14th year"? ## 1 Answer End of the 14th year is essentially the same as the start of the 15th year. As in, you need to apply the interest for the 14th year before you withdraw the $309.

This problem has several steps and is most easily solved in reverse. First you need to figure out what principal A you need to withdraw \$309 for 5 years. Second, you need to figure out what principal B you need with 8% interest over 2 years to reach principal A. Lastly, you need to find what annuity payment needs to be made each year for 12 years to reach principal B. That will be your answer.