Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

( Comprehensive problem ) You would like to have $ 5 1 , 0 0 0 in 1 6 years. To accumulate this amount, you

(Comprehensive problem) You would like to have $51,000 in 16 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 8 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 this lump-sum deposit be?(Assume you can earn 8 percent on this deposit.)
c. At the end of five years, you will receive $10,000 and deposit this in the bank toward your goal of $51,000 at the end of year 16. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 8 percent on your deposits.)
a. How much must you deposit annually to accumulate this an ?' no'...1 t?
$(Round to the nearest cent.)
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?
$ (Round to the nearest cent.)
c. If you deposit $10,000 received at the end of five years in the bank, what will the amount grow to by the end of year 16?
$ (Round to the nearest cent.)
In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in Year 1 to reach your goal? pleaes answer all questions, thank you!
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

Multinational Financial Management

Authors: R M Srivastava

1st Edition

8174466703, 9788174466709

More Books

Students also viewed these Finance questions