Question 1.7 Consider the cash flow series given in the following diagram. What value of C makes the deposit series equivalent to the withdrawal series at an interest rate of 7% compounded annually? 0 $1,500 1 $1,150 N $800 3 $450 A) $547.69 B) $565.13 C) $583.27 D) Answers A, B and C are not correct 4 5 2C 6 3C 7 4C 8
Question 1.7 Consider the cash flow series given in the following diagram. What value of C makes the deposit series equivalent to the withdrawal series at an interest rate of 7% compounded annually? 0 $1,500 1 $1,150 N $800 3 $450 A) $547.69 B) $565.13 C) $583.27 D) Answers A, B and C are not correct 4 5 2C 6 3C 7 4C 8
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Question 1.7
Consider the cash flow series given in the following diagram. What value
of C makes the deposit series equivalent to the withdrawal series at an interest rate of 7%
compounded annually?
C
3
4
5
$450
[III]
0
$1,500
$1,150
1
0
A) $547.69
B) $565.13
C) $583.27
D) Answers A, B and C are not correct.
2
1
$800
1750
2C
6
A) $3,956.02
B) $4,114.87
C) $4,341.53
D) Answers A, B and C are not correct
Question 1.8
You will do 5 annual deposits according to the following schedule. At the
end of the first year you will deposit $1,750 and subsequent deposits increase at a rate of 5% per
year. Last deposit is at the end of year 5. Then, starting at the end of the sixth year, you do 4
equal annual withdrawals. If the interest rate is 12% compounded annually, what is the amount
of each withdrawal assuming that your bank balance will be zero at the end of ninth year?
3C
2
3
4
5
6
7
ஆன்
1750(1 + 0.05)¹
1750(1 + 0.05)²
1750 (1 + 0.05)³
1750(1 + 0.05)4
7
%12
4C
8
8
9](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb7a7ffb0-b5d2-45ab-98f1-3ca3eb67fe45%2F66c50f16-e43b-438c-b08a-aebcda86ebc6%2Feccydd_processed.png&w=3840&q=75)
Transcribed Image Text:Question 1.7
Consider the cash flow series given in the following diagram. What value
of C makes the deposit series equivalent to the withdrawal series at an interest rate of 7%
compounded annually?
C
3
4
5
$450
[III]
0
$1,500
$1,150
1
0
A) $547.69
B) $565.13
C) $583.27
D) Answers A, B and C are not correct.
2
1
$800
1750
2C
6
A) $3,956.02
B) $4,114.87
C) $4,341.53
D) Answers A, B and C are not correct
Question 1.8
You will do 5 annual deposits according to the following schedule. At the
end of the first year you will deposit $1,750 and subsequent deposits increase at a rate of 5% per
year. Last deposit is at the end of year 5. Then, starting at the end of the sixth year, you do 4
equal annual withdrawals. If the interest rate is 12% compounded annually, what is the amount
of each withdrawal assuming that your bank balance will be zero at the end of ninth year?
3C
2
3
4
5
6
7
ஆன்
1750(1 + 0.05)¹
1750(1 + 0.05)²
1750 (1 + 0.05)³
1750(1 + 0.05)4
7
%12
4C
8
8
9
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