Suppose the bank paid you interest at the rate of 15% per year. What amount of money would you have to put in the bank today, in order to be able to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2 and $30,000 at the end of Year 3, and have nothing left in the account after the last withdrawal (round to the nearest dollar)?

Q: Suppose the bank paid you interest at the rate of 15% per year. What amount of money would you have to put in the bank today, in order to be able to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2 and $30,000 at the end of Year 3, and have nothing left in the account after the last withdrawal (round to the nearest dollar)?

or

Q: Let’s say you received interest from the bank at a rate of 15% annually. To be able to withdraw $10,000 at the end of Year 1, $20,000 at the end of Year 2, and $30,000 at the end of Year 3, and to have nothing left in the account after the last withdrawal (rounded to the closest dollar), how much money would you need to deposit in the bank today?

• $71,125
• $43,544
• $60,000
• $32,154
• None of these are true

Explanation: Let’s walk through the process again, calculating the present value of the future cash flows, discounted at an interest rate of 15% per year, to determine how much money would be needed today to make the withdrawals