Chapter M, Problem 4MC

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.)

1. a. $2,000 + ($2,000 × 0.926) + ($2,000 × 0. 857) + ($2,000 × 0.794)
2. b. $\frac{\$2,000}{0.735}\times 4$
3. c. ($2,000 × 0.926) + ($2,000 × 0.857) + ($2,000 × 0.794) + ($2,000 × 0.735)
4. d. $\frac{\$2,000}{0.926}\times 4$