The Solution to This Problem Requires Time Value of Money

question 33

Multiple Choice

The solution to this problem requires time value of money calculations.Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
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How much would have to be deposited in a savings account earning 6%,so that equal annual withdrawals of $200 can be made at the end of each of ten years? The balance at the end of the last year would be zero.

• A)$528
• B)$1,472
• C)$2,000
• D)$2,636

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Definitions:

Accumulated Depreciation

The total amount of an asset's cost that has been allocated as depreciation expense over its useful life.

Retroactive Changes

Adjustments made to records, policies, or financial statements that apply to previous periods.

Loss on Disposal

The financial loss incurred when an asset is sold for less than its book value.