Question
Assume you are planning to deposit $1,000 that you will receive one year from today into a tax-free savings account. (Show specific work!) a. If
Assume you are planning to deposit $1,000 that you will receive one year from today into a tax-free savings account. (Show specific work!)
a. If interest rates are 8 percent per year, what is the value of your planned investment today?
b. If the interest rate is 8 percent compounded semi-annually, calculate the value today for the investment in part a.
c. Rather than waiting one year to deposit the $1,000, you plan on depositing $250 every 3 month with your first deposit occurring 3 months from now. If interest rates are 8 percent compounded quarterly, what is the value today of these quarterly deposits?
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