Question A

The present value of a given amount decreases as the number of years over which it is to be discounted also decreases.

TrueFalse

Question B

You have deposited $21,618 into a special account that has a guaranteed interest rate of 18% per year. If you are willing to completely exhaust the account, what is the maximum amount that you could withdraw at the end of the next 9 years? Select the amount below that is closest to your answer. (Ignore income taxes) Show your work.

(a) $5,024

(b) $7,080

(c) $2,402

(d) $2,834

Question C

You have just deposited $5,188 into a special account that has a guaranteed interest rate. If you withdrew $1,400 at the end of each year for 7 years, you will completely exhaust the balance in the account. The guaranteed interest rate is closer to: (Ignore income taxes), Show your work.

(a) 13%

(b) 27%

(c) 19%

(d) 89%