MrA Deposits $5000 Today in a Fund Earning Interest at J₂

question 26

Multiple Choice

Mr.A deposits $5000 today in a fund earning interest at j₂ = 6%.He wishes to withdraw $490 every 6 months for as long as possible.He will make his first withdrawal exactly 2 years from today.When will he make the final smaller concluding (drop) withdrawal?

• A)End of 6.5 years
• B)End of 7 years
• C)End of 8.5 years
• D)End of 9 years

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Definitions:

Prepaid Expense

An expense paid in advance of its due date, recorded as an asset on the balance sheet until the benefits are realized or the service period expires.

Magazine Subscription

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Paid

Refers to the status of an obligation or invoice that has been settled or fulfilled through payment.

Vertical Analysis

An approach to financial statement examination whereby each component is presented relative to a foundational number in the report.