By looking at the history of your savings account, you learned the interest rate

Question

By looking at the history of your savings account, you learned the interest rate in each period during the last five years was as foliows: End of Year Amount of Interest Rate Withdrawal Amount of Deposit $1,000 4% 3% $2,000 $1,500 $2,000 5% $3,000 4% S1.600 The 3% $1,000 each remaining balance at the end of each period will earn interest at the prevailing rate at the beginning of For example, $1 plus $2,000 deposit at will and any the end of after $1,000 earn 3% interest and so on. How much would end year (right withdrawal)? you have at the

Explanation / Answer

The figure which is written in bold are interest amounts.

The balance after withdrawal of $1000 is $7928.20 - 1000 = $6928.20

n Int.Rate Amt. Deposited Balance at EOY(Principal + Interest) Amt. withdrawal 0 4% $1000 $1000 - 1 3% $2000 3040 (1000 + 40 +2000) - 2 4% $1500 4631.20(3040 +91.20 + 1500) 2000 3 5% $3000 5736.45(2631.20 +105.25+3000) 4 4% $1600 7623.27 (5736.45 + 286.82 + 1600) 5 3% 7928.20(7623.27 + 304.93) $1000

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