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Task briefing: Today you decide to start to save money for your kids when they go to the university. Now that you are able to
Task briefing:
Today you decide to start to save money for your kids when they go to the university.
Now that you are able to save 5000 /year, you decided to save those 5000 per year in a bank account that offers a 6% interest rate compounded yearly, till the day your kids start the university (that is to say, in 20 years).
Please, answer the following questions:
1.
If you do your deposits at the end of every year (so your first deposit will be in one year from today) in a bank account that offers a 6% interest rate compounded yearly, and you continue doing so till the day your kids go to the university (that is to say, in 20 years):
a) Draw the timeline (at least the first five periods) with its corresponding numeration of periods and cashflows in their corresponding points. (10 points)
b) How much money will you have at the end? (20 points)
2.)
If you decide to do your deposits at the beginning of every year (so your first deposit will be done today) in a bank account that offers a 6% interest rate compounded yearly, and you continue doing so till the day your kids go to the university (that is to say, in 20 years):
a) Draw the timeline (at least the first five periods) with its corresponding numeration of periods and cashflows in their corresponding points. (10 points)
b) What is the difference between this case and the previous one? (10 points)
c) How much money will you have at the end? (20 points)
3.)
If you decide to do your deposits at the end of every year (similarly to question 1, so your first deposit will be in one month from today) in a bank account that offers a 6% interest rate compounded yearly, and the deposits will increase in a 0.5% year after year, and you keep on doing so for the next 20 years:
a) Draw the timeline (at least the first five periods) with its corresponding numeration of periods and cashflows in their corresponding points. (10 points)
b) How much money will you have at the end? (20 points)
(hello can you please send me the answer for question 3 only i put the others because they are conectted to each other.) thank you
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