A student plans to deposit P1,500 in the bank now and another P3,000 for the next 2 years. If he plans to withdraw P5,000 three years from after his last deposit for the purpose of buying shoes, what will be the amount of money left in the bank after one year of his withdrawal? Effective annual interest rate is 10%. A. P1,549.64 B. P1,459.64 C. P1,345.98 D. P1,945.64

The correct answer is A. P1,549.64.

The student will deposit P1,500 now and another P3,000 for the next 2 years. This means that he will have a total of P1,500 + P3,000 + P3,000 = P7,500 in the bank after 2 years. He plans to withdraw P5,000 three years from after his last deposit for the purpose of buying shoes. This means that he will have P7,500 – P5,000 = P2,500 in the bank after 3 years. The effective annual interest rate is 10%. This means that the interest earned on the P2,500 will be 10% of P2,500 = P250. The amount of money left in the bank after one year of his withdrawal will be P2,500 + P250 = P2,750.

Here is a breakdown of the calculation:

• P1,500 deposited now
• P3,000 deposited in 1 year
• P3,000 deposited in 2 years
• Total = P7,500
• Withdraw P5,000 in 3 years
• Balance = P2,500
• Interest earned = 10% of P2,500 = P250
• Balance after 1 year = P2,500 + P250 = P2,750