Solve the Problem. -An Initial Deposit of $45,000 Is Made into an Account

question 33

Multiple Choice

Solve the problem.
-An initial deposit of $45,000 is made into an account that earns 5.4% compounded continuously. Money is then withdrawn at a constant rate of $2,700 a year until the amount in the account is 0. Find the amount in the
Account at any time t. When is the amount 0? What is the total withdrawn from the account?

• A) . The account will be depleted after about 35.1 years. A total of about $94,770 will have been withdrawn at that time.
• B) . The account will be depleted after about 42.6 years. A total of about $115,130 will have been withdrawn at that time.
• C) . The account will be depleted after about 15.4 years. A total of about $41,580 will have been withdrawn at that time.
• D) . The account will be depleted after about 20.5 years. A total of about $55,350 will have been withdrawn at that time.

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Definitions:

Rights Offering

A method by which a company raises capital by giving existing shareholders the right to buy additional shares directly from the company at a discounted price before the new shares are offered to the public.

Market Price

The market's current rate for purchasing or selling an asset or service.

Subscription Price

The price at which existing shareholders are allowed to buy additional shares of a company, usually at a discount.