Question
1. On the first day of the year, a man deposits 1,000 in a bank at 8% per yearcompounded annually. He withdraws 80 at the
1. On the first day of the year, a man deposits 1,000 in a bank at 8% per yearcompounded annually. He withdraws 80 at the end of the first year, 90 at the end ofthe second year, and the remaining balance at the end of the third year. How much doeshe withdraw at the end of the third year?
2. What amount of money is equivalent to receiving 5,000 two years from today, ifinterest is compounded quarterly at the rate of 2.5% per quarter?
3. On the first day of the year, a man deposits 1,000 in a bank at 8% per yearcompounded annually. He withdraws 80 at the end of the first year, 90 at the end ofthe second year, and the remaining balance at the end of the third year. How muchbetter off, in terms of net cash flow, would he have been if he had not made thewithdrawals at the ends of years one and two?
4. A person lends 2,000 for five years at 10% per annum simple interest; then theentire proceeds are invested for 10 years at 9% per year, compounded annually. Howmuch money will the person have at the end of the entire 15-year period?
5. On the first day of the year, a man deposits 1,000 in a bank at 8% per yearcompounded annually. He withdraws 80 at the end of the first year, 90 at the end ofthe second year, and the remaining balance at the end of the third year. What is the netcash flow?
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