You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to withdraw $113 in the sixth month and increase your withdrawals by $17 over the previous month’s withdrawal. How much should you deposit now in a bank account that pays 12% per year compounded monthly? Hint: Determine m and k and use the decision tree to find how you must setup the cash flow equation. Remember to bring all the cash flows to the proper time period required to answer this question.
You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to withdraw $113 in the sixth month and increase your withdrawals by $17 over the previous month’s withdrawal. How much should you deposit now in a bank account that pays 12% per year compounded monthly? Hint: Determine m and k and use the decision tree to find how you must setup the cash flow equation. Remember to bring all the cash flows to the proper time period required to answer this question.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to withdraw $113 in the sixth month and increase your withdrawals by $17 over the previous month’s withdrawal. How much should you deposit now in a bank account that pays 12% per year compounded monthly?
Hint: Determine m and k and use the decision tree to find how you must setup the cash flow equation. Remember to bring all the cash flows to the proper time period required to answer this question.
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