The sum of $3,000 is deposited into an account paying 10% annually.If $1,206 is withdrawn at the end of years 1 and 2,how much then remains in the account?"
A) $1,326.97
B) $1,206.34
C) $1,097.40
D) $587.32

Question

Quizplus · Accepted Answer

FV_{Year 1} = PV(1 + r) − WithdrawalFV_{Year 1} = $3,000(1.1) − $1,206FV_{Year 1} = $2,094FV_{Year 2} = FV_{Year 1} (1 + r) − WithdrawalFV_{Year 2} = $2,094(1.1) − $1,206FV_{Year 2} = $1,097.40

The Sum of $3,000 Is Deposited into an Account Paying