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1 May, 22:23

You have deposited $8,800 in a special account that has a guaranteed interest rate of 20% per year. If you are willing to completely exhaust the account, what is the maximum amount that you could withdraw at the end of each of the next 7 yn exceliea

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  1. 1 May, 23:15
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    Maximum amount = $10,108.43

    Explanation:

    The maximum amount that can be withdrawn from the account would be the future value of the lump sum of $8,800 invested at 20% p. a.

    The future value under compound interest is computed as follows:

    FV = P * (1 + r) ^ (n)

    FV - future value P - principal deposit, rate per period, n - number of period

    The future value

    PV - 8,800, r - 20%, n - number of years

    = 8,800 * (1+0.2) ^ (7) = $10,108.43

    Future value = $10,108.43
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