Question
A person thinks to open a savings account that pays 12% annually. The plan is to deposit at the end of the first year $
A person thinks to open a savings account that pays 12% annually. The plan is to deposit at the end of the first year $ 25,000 and from year 2 increase your deposit by $ 5,000 with respect to the deposit of the previous year. However, these increases will only be made until year 10, to continue with constant annual deposits of the same amount (to year 10) for the rest of the holding horizon, which is 20 years. A) What is the accumulated amount at the end of the first 10 years? b) What is the accumulated amount at the end of the 20 years of holding the savings account? c) If the intention is to accumulate the same amount of money at the end of the 20 years, how much per year Should it be a series of deposits starting in year 1 and ending in year 20, replacing the initial savings plan?
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