Barnett/Ziegler/Byleen Finite Mathematics 12e
Derivation of Short Cut Formula
We could proceed to calculate the next four payments and then simply find the total of the 8 payments. There are 8 payments since there will be 8 total withdrawals:
(2 years) (four withdrawals per year) = 8 withdrawals.
This method is tedious and time consuming so we seek a short cut method.