Question
Suppose you invest $10,000 per year for 25 years at an interest rate of 4.5% per year. Investments are made at the beginning of each
-
Suppose you invest $10,000 per year for 25 years at an interest rate of 4.5% per year. Investments are made at the beginning of each year so the first investment is made today (t = 0) and the last investment is made 24 years from now (t = 24). Note that you make 25 investments in total, including the investment made today.
-
What is your account balance immediately after the last investment (at t = 24)?
-
What is your account balance 25 years from now (at t = 25)?
-
What single investment made today (t = 0) would give the same account balance in
25 years (t = 25)?
Suppose you invest $10,000 per year for 25 years at an interest rate of 4.5% per year. Investments are made at the beginning of each year so the first investment is made today (t = 0) and the last investment is made 24 years from now (t = 24). Note that you make 25 investments in total, including the investment made today.
-
What is your account balance immediately after the last investment (at t = 24)?
-
What is your account balance 25 years from now (at t = 25)?
-
What single investment made today (t = 0) would give the same account balance in
25 years (t = 25)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started