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How much money must you deposit in your bank account

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Question - (a) You need to make the following withdrawals from your bank account to pay for some expected expenses at the end of each of the next 4 years. Given the variable interest rate that your bank will offer in each year, how much money must you deposit in your bank account now to prepare for these withdrawals?

End of year

1

2

3

4

Withdrawal ($)

5,000

6,000

7,000

8,000

Annual interest rate (%)

3

4

5

6

 (b) Now you have to make the same withdrawals as specified in (a) but the interest rate in the next 4 years will remain at 5%. How much money must you deposit in your bank account now to prepare for these withdrawals?

Reference no: EM133149947

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