Anita opens a savings account. At the start of cach month she deposits SX into the savings account. At the end of each month, after interest is added into the savings account, the bank withdraws $2500 from the savings account as a loan repayment. Let M be the amount in the savings account after the n withdrawal. The savings account pays interest of 4.2% per annum compounded monthly. Show that after the second withdrawal the amount in the savings account is given by (i) M = X(1.0035+ 1.0035)-2500(1.0035 + %3D (ii) Find the value of X so that the amount in the savings account is $80 000 after the last withdrawal of the fourth year.

Anita opens a savings account. At the start of cach month she deposits SX into the savings account. At the end of each month, after interest is added into the savings account, the bank withdraws $2500 from the savings account as a loan repayment. Let M be the amount in the savings account after the n withdrawal. The savings account pays interest of 4.2% per annum compounded monthly. Show that after the second withdrawal the amount in the savings account is given by (i) M = X(1.0035+ 1.0035)-2500(1.0035 + %3D (ii) Find the value of X so that the amount in the savings account is $80 000 after the last withdrawal of the fourth year.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 4MC: Refer to the present value table information on the previous page. What amount should Brett have in...

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Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
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