Question

Question 8 8 pts Your initial investment in a bank is $22,000. Every year you withdraw 2A amount from the bank. At end of 10 years you exhaust out your investment in the bank. What is the value of A? interest rate = 6%. (Select A, B, C, D or E) A. 1360 B. 1495 C. 1100D. 1248. E. Information missing

Answer 1

Ans :

Initial investment at bank (P) = 22000$

withdraw amount every year = 2A

time period (n) = 10 year

Interest Rate (i) = 6%

^{Initial investment is present value of the all investment that gives annual withdraw 2A till 10 years with 6% growth ;}

^{So, as per ques. we used the annual amount formula for present value.}

^{(AP)w (A/P 1+i)" IN To find Annual Value (A) of a Present Sum (P) To ta kena vale a la presensum cos -- P-Cao) - A= P * (A/P IN 1 + i)" - 1}

(A/P)_6,10 = {0.06*(1+0.06)} / {(1+0.06)¹⁰ - 1}

= 0.1359

Annual withdraw amount = P * (A/P)_6,10 => 2A = 22000 * 0.1359 = 2989.10

A = 2989.10 / 2 = 1494.55 Approx (1495) Ans. option B is correct