Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

( Comprehensive problem ) You would like to have $ 7 3 , 0 0 0 in 1 2 years. To accumulate this amount, you

(Comprehensive problem) You would like to have $73,000 in 12 years. To accumulate this amount, you plan t deposit an equal sum in the bank each year that will earn 7 percent interest compounded annually. Your first payment will be made at the end of the year.
a. How much must you deposit annually to accumulate this amount?
b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be?(Assume you can earn 7 percent on this deposit.)
c. At the end of year 5, you will receive $15,000 and deposit it in the bank in an effort to reach your goal of $73,0 at the end of year 12. In addition to the lump-sum deposit, how much must you invest in 12 equal annual deposit reach your goal? (Again, assume you can earn 7 percent on this deposit.)
b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be?
$32412.87(Round to the nearest cent.)
c. If you deposit $15,000 received at the end of year 5 in the bank, how much will it grow to in the account at the end of year 12?
$
(Round to the nearest cent.)
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions