Items 69 Through 72 Apply to the Appropriate Use of Present

Multiple Choice

Items 69 through 72 apply to the appropriate use of present value tables. Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 69 to 72 is based on 10% interest compounded annually.

-What amount should an individual have in a bank account today before withdrawal if $7,000 is needed each year for four years with the first withdrawal to be made today and each subsequent withdrawal at one-year intervals? (The balance in the bank account should be zero after the fourth withdrawal.)

A) $7,000 + ($7,000 × 0.909) + ($7,000 × 0.826) + ($7,000 × 0.751)
B) $7,000 ÷ 0.683 × 4
C) ($7,000 × 0.909) + ($7,000 × 0.826) + ($7,000 × 0.751) + ($7,000 × 0.683)
D) $7,000 ÷ 0.909 × 4