4a. Suppose two $100 withdrawals are made, the first in 2022 and the second in 2026, emptying an account that earns 5% interest, compounded annually. What amount was deposited when the account was originally opened in 2020? Show any work; partial credit might not be awarded in the absence of mnemonic notation [e.g., F(P/F, i, n)].
4a. Suppose two $100 withdrawals are made, the first in 2022 and the second in 2026, emptying an account that earns 5% interest, compounded annually. What amount was deposited when the account was originally opened in 2020? Show any work; partial credit might not be awarded in the absence of mnemonic notation [e.g., F(P/F, i, n)].
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![4a.
Suppose two $100 withdrawals are made, the first in 2022 and the second in 2026, emptying an account that earns 5% interest, compounded
annually. What amount was deposited when the account was originally opened in 2020?
Show any work; partial credit might not be awarded in the absence of mnemonic notation [e.g., F(P/F, i, n)].](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F404f3a78-f730-4773-ad7b-fe6612b342a7%2F8c0f4b90-8ba7-4064-8a80-aedbc2b0ad13%2F8d4tyli_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4a.
Suppose two $100 withdrawals are made, the first in 2022 and the second in 2026, emptying an account that earns 5% interest, compounded
annually. What amount was deposited when the account was originally opened in 2020?
Show any work; partial credit might not be awarded in the absence of mnemonic notation [e.g., F(P/F, i, n)].
Expert Solution
Step 1
While analyzing the time value of money, the present value of 2 withdrawals should be equal to the initial deposit.
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