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:

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, contributing to the coverage of fixed costs and profit generation.

Manufacturing Cost

The total expense incurred in the process of producing goods, including materials, labor, and overhead costs.

Unit

A single item, person, or measurement regarded as an indivisible part of a larger quantity or whole.

Operating Leverage (DOL)

A measure of how revenue growth translates into growth in operating income, emphasizing the impact of fixed costs.