Question

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You are going to deposit certain amount in the next four years. Your saving account offers...

You are going to deposit certain amount in the next four years. Your saving account offers 10% of annual interest rate.

First year:         $500

Second year:     $600

Third year:        $700

Fourth year:      $800.

How much you can withdraw four years later?

  1. 2403.17
  2. 3185.05
  3. 2961.50
  4. 3319.25

Solutions

Expert Solution

Using Formula = P ( 1 + r/100)n

For first Year = 500 ( 1 + 10/100)1

= 550

For Second Year = (550 + 600)( 1 + 10/100)1

= 1150 ( 1 + 10/100)1

= 1265

For Third Year = (1265 + 700) ( 1 + 10/100)1

= 1965 ( 1 + 10/100)1

= 2161.5

For Fourth Year = 2161.5 + 800

= $2961.5 i.e. OPTION C

jeff jeffy answered 2 years ago
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