A bank account which interest is earned 4% per year compounded annually starts with a balance of $50000. payments of $1000 are made out of the account once a year for ten years starting today. interest is earned right before each payment is made
a)what is the balance of the account right after the tenth payment is made?
b)Assume that the tenth payment exhausts the account. what is the largest payment that can be made from this account?
So Im not really sure where to start. I'm having a hard time completely understanding the original statements made. I mostly just need help setting up the problem but may need more help once i get that figure out. Here is what I have as far as a formula
49,000(1.04)^n-1-(1000/1-1.04)
Im really not sure if this is right I got the idea for the formula from a similar problem my teacher did but I'm not entirely sure if the problem is similar enough to use the same formula. Please help.
a)what is the balance of the account right after the tenth payment is made?
b)Assume that the tenth payment exhausts the account. what is the largest payment that can be made from this account?
So Im not really sure where to start. I'm having a hard time completely understanding the original statements made. I mostly just need help setting up the problem but may need more help once i get that figure out. Here is what I have as far as a formula
49,000(1.04)^n-1-(1000/1-1.04)
Im really not sure if this is right I got the idea for the formula from a similar problem my teacher did but I'm not entirely sure if the problem is similar enough to use the same formula. Please help.
