Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. assume that you open a bank account that promises

Assume that you open a bank account that promises a fixed APR of 3% per...

50.1K

Verified Solution

Question

Finance

image

Assume that you open a bank account that promises a fixed APR of 3% per year for seven years with monthly compounding. You plan to make monthly withdrawals of $500 at the end of every month over the next seven years. Assume that the first withdrawal will be one month from today. The question that you would like to answer: how much must you deposit today to sustain your withdrawal plan? Assume that your objective is to have a zero balance immediately after your last withdrawal. Which of the following formulas is most appropriate for answering this question? PV = 5001-(1+0.03)-7 O PV 5001-(1+(0.03/12)) -84 (0.03/12) O PV 500 (1+(0.03/12))84-1 (0.03/12) O PV = 500/(1 + (0.03/12))84

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students