100,000 invested today in a fund that pays 25% interest compounded annually. 3 yrs later, you borrow 50,000 with interest of 20% annually in a bank and invest to the fund. 2 yrs later, you withdraw enough money from the fund to repay the bank loan and all interest due on it. 3 yrs from this withdraw you start taking 20,000 per year in the fund. After 5 withdrawals, you withdraw the balance in the fund. How much was withdrawn? a. 1.9 Million b. 1.3 Million c. 1.6 Million d. 1 Million
100,000 invested today in a fund that pays 25% interest compounded annually. 3 yrs later, you borrow 50,000 with interest of 20% annually in a bank and invest to the fund. 2 yrs later, you withdraw enough money from the fund to repay the bank loan and all interest due on it. 3 yrs from this withdraw you start taking 20,000 per year in the fund. After 5 withdrawals, you withdraw the balance in the fund. How much was withdrawn? a. 1.9 Million b. 1.3 Million c. 1.6 Million d. 1 Million
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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100,000 invested today in a fund that pays 25% interest compounded annually. 3 yrs later, you borrow 50,000 with interest of 20% annually in a bank and invest to the fund. 2 yrs later, you withdraw enough money from the fund to repay the bank loan and all interest due on it. 3 yrs from this withdraw you start taking 20,000 per year in the fund. After 5 withdrawals, you withdraw the balance in the fund. How much was withdrawn?
a. 1.9 Million
b. 1.3 Million
c. 1.6 Million
d. 1 Million
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