Bond Valuation (Time-value of money): (10 points) Claire wishes to have

$1.5

million in 30 years. She cannot afford to make large deposits at the moment; however, she believes that she will be able to increase her deposits by 3 percent per year for the next 30 years. She will make her first deposit in one year. Her discount rate is 5 percent per year.\ (a) how large an initial deposit is needed? (5 points)\ (b) If instead of increasing his deposit each year, Rachel invested the same amount

1. Bond Valuation (Time-value of money): (10 points) Claire wishes to have $1.5 million in 30 years. She cannot afford to make large deposits at the moment; however, she believes that she will be able to increase her deposits by 3 percent per year for the next 30 years. She will make her first deposit in one year. Her discount rate is 5 percent per year. (a) how large an initial deposit is needed? (5 points) (b) If instead of increasing his deposit each year, Rachel invested the same amount