Question 2 (6 marks)

Suppose you are to deposit funds into a savings account at a continuous rate of payment of $100 per year, in perpetuity. The payments will commence in 6 months.

Assuming i = 5.5%, calculate each of the following (show all working).

1. The present value now, of all future deposits made. Give your answer to the nearest cent. [2 marks]

2. The present value in exactly 5 years time, of all future payments made from time 6 onwards. Give your answer to the nearest cent. [1 mark]

3. The present value in exactly 100 years time, of all future payments made from time 100 onwards. Give your answer to the nearest cent. [1 mark]

4. The accumulated value in the savings account in exactly 30 years time from now. Give your answer to the nearest cent. [2 marks]