Question
Suppose you deposit $600 at the end of each year for 11 years into investment account A with a guaranteed interest rate of 7%
Suppose you deposit $600 at the end of each year for 11 years into investment account A with a guaranteed interest rate of 7% compounded semi-annually. Find the value in the account at the end of 11 years. Suppose you have a choice of investing $300 at the end of each 3 month period for 11 years into investment account B which pays a guaranteed nominal annual interest rate of 6.5% compounded quarterly. How much will you have in the account at the end of 11 years if you choose to invest in account B? How much will you gain or lose by investing in account B rather than A?
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Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
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