What Amount Should an Individual Have in a 10% Bank

question 49

Multiple Choice

What amount should an individual have in a 10% bank account today before withdrawal if €5,000 is needed each year for four years with the first withdrawal to be made today and each subsequent withdrawal at one-year intervals? (The balance in the bank account should be zero after the fourth withdrawal.)

• A) €5,000 + (€5,000 × 0.909) + (€5,000 × 0.826) + (€5,000 × 0.751)
• B) €5,000 ÷ 0.683 × 4
• C) (€5,000 × 0.909) + (€5,000 × 0.826) + (€5,000 × 0.751) + (€5,000 × 0.683)
• D) €5,000 ÷ 0.909 × 4

---

Definitions:

Void

Having no legal force or effect; null and totally ineffective.

Breach of Contract

The omission of performing any clause of an agreement, whether written or orally communicated, without a defensible legal excuse.

Payments

The act of transferring money or other valuable consideration from one party to another as a fulfillment of a legal obligation or for the acquisition of goods or services.

Contract

A legally binding agreement between two or more parties, creating obligations that are enforceable by law.