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The sum of $5200 is deposited into an account paying 10% annually. If $ 800 is...

The sum of $5200 is deposited into an account paying 10% annually. If $ 800 is withdrawn at the end of years 1, year 2 and year 3, how much remains in the account at the end of year 3?

Solutions

Expert Solution

Value of $5200 at the end of 3 years = PV x (1+i)n

Value of $5200 at the end of 3 years = 5200 x (1+0.10)3

Value of $5200 at the end of 3 years = $ 6,921.20

Future Value of 800 withdrawn per annum for 3 years

PMT = $800

N = 3

I = 10%

Using financial calculator or FV function in excel

Future Value of 800 withdrawn per annum for 3 years = $2648

Therefore,

Amount in account at the end of 3 years = $6921.20 - $2648

Amount in account at the end of 3 years = $4273.20

jeff jeffy answered 2 years ago
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