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In: Economics

Problem 1) Today, April 1st 2020, I put $1000 into the bank. Every month thereafter I...

Problem 1) Today, April 1st 2020, I put $1000 into the bank. Every month thereafter I added the same amount, plus $20 more than the month before (i.e. $1020, $1040, $1060, etc.) If the sign on the door of my bank says they pay 6% nominal yearly interest, how much will I be able to take out of the bank on January 1st, 2023. Draw a cash-flow diagram.

Solutions

Expert Solution

First deposit of $ 1,000 is made today that is 1st of April 2020. And each month the deposit increase by an amount $ 20. Here i have assumed that the last deposit will be made on 1st of January 2023.

Total number of deposit = 34

The amount that we can withdraw

Future value = $ 48,802.87

Solved it using excel too got the same value refer the attached picture

refer the attached picture for the cash flow diagram

The amount deposited is very small so I have to change the final future value so than both are visible. Please understand my limitation. Kindly contact if having any query will be obliged to you for your generous support. Please help me. Thank you.

Rahul Sunny answered 7 months ago
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