Question
Part 1.Derek wants to withdraw $12,218.00 from his account 8.00 years from today and $13,422.00 from his account 12.00 years from today. He currently has
Part 1.Derek wants to withdraw $12,218.00 from his account 8.00 years from today and $13,422.00 from his account 12.00 years from today. He currently has $2,943.00 in the account. How much must he deposit each year for the next 12.0 years? Assume a 6.67% interest rate. His account must equal zero by year 12.0 but may be negative prior to that.
Part 2. Derek can deposit $258.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 13.00% and compounds interest monthly. Derek can deposit $2,478.00 per year for the next 10 years into an account at Bank B. The first deposit will be made next year. Bank B compounds interest annually. What rate must Bank B pay for Derek to have the same amount in both accounts after 10 years?
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