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Determine how much should deposit now in a bank account

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Reference no: EM132472140

You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to withdraw $136 in the sixth month and increase your withdrawals by $16 over the previous month's withdrawal.

Question 1: How much should you deposit now in a bank account that pays 12% per year compounded monthly?

Enter the answer with two decimal places. Do not enter the dollar ($) symbol. eg. 1234.56

Hint:

Question2: Determine m and k and use the decision tree to find how you must setup the cash flow equation. Remember to bring all the cash flows to the proper time period required to answer this question.

Hint:

Question 3: What is m? What is k? What is r?

Remember:

m is the number of compounding periods in a year

k is the number of cash flow periods in a year

r is the nominal interest rate

For the given case, look up the decision tree to find how to setup the cash flow equation.

Reference no: EM132472140

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