Question
Show the Process on Excel Sheet. A. You plan to deposit the following amounts in your savings account at the beginning of each year. In
Show the Process on Excel Sheet.
A. You plan to deposit the following amounts in your savings account at the beginning of each year. In Year 1, you plan to deposit $3000. In year 2 and Year 3, you plan to deposit $4000 and in Year 4 and 5, you plan to deposit $5000. Assume the savings account earns 3.5% compounded annually. If you do as you plan, how much will you have at the end of ten years?
B. Assume you receive payments from an investment at the end of each year. What is the present value of an investment that promises to pay the following: $240 received at the end of each year for 3 years. Assume an 8% interest rate compounded semiannually. Does your equal payment period match the compounding period?
C. You deposit equal payments of $1000 in the bank for the next ten years. Assume the payments are made at the beginning of each year. Given you will have $18,000 at the end of ten years with quarterly compounding. What is the effective rate, the nominal rate and the periodic rate of this investment? Does your equal payment period match your compounding period?
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