Question

Bob invests X in an account that pays interest at an annual effective rate of 8%. Ten years later, he withdraws X. Ten years after that, he withdraws 1,000, which exhausts the account. Calculate X.

Answer 1

$399.68

Step-by-step explanation:

The computation of X is shown below:

X = X ÷ (1 + 0.08)^10 + $1,000 ÷ (1 + 0.08)^20

= X ÷ 2.158925 + 214.548207

X - X ÷ 2.158925 = 214.548207

2.158925X - X ÷ 2.158925 = 214.548207

1.158925X = 214.548207 × 2.158925

X = 2.14548207 × 2.158925 ÷ 1.158925

= $399.68