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Q2. Suppose you work as a freelancer. You would like to invest some of your income, but because your income fluctuates as a freelancer,
Q2. Suppose you work as a freelancer. You would like to invest some of your income, but because your income fluctuates as a freelancer, your deposits into your savings account vary from year to year. Suppose that you deposit money following the pattern given in Figure 1. Also suppose that the bank imposes a deposit fee of $10 for all deposits after the first one. (a) Draw the net cash flow diagram for this investment scheme. 1 0 1 2 3 4 3,000 2,500 3,300 I Figure 1: Figure for Question 2. (b) How much money will you be able to withdraw at the end of year five if the interest for the first two years is 5%, the interest for the next two years is 7%, and then the interest for the final year is 4%?
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