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

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Definitions:

Work in Process

Inventory representing the cost of unfinished goods in production, including labor, materials, and overhead.

Yield

The earnings generated and paid to investors for an investment, often expressed as a percentage of the price of the investment.

Bottling Department

A specific division within a manufacturing facility or plant where products, often beverages, are placed into bottles as part of the production process.

Conversion Cost

The combined costs of direct labor and manufacturing overheads, which are incurred to convert raw materials into finished goods.