Question
This is an actuarial science question Question: A person deposits $100 at the beginning of every year for 20 years with a simple interest. At
This is an actuarial science question
Question: A person deposits $100 at the beginning of every year for 20 years with a simple interest. At the end of 20 years, the person's accumulated value is $2825 when invested with simple interest. What is the accumulated value when the investment occurs under compound interest?
My question is:
- How should we calculate the rate of simple interest?
-Is the simple rate same as a compound rate?
-Can we apply the annuity-due formula to calculate accumulated value under simple interest? if so, how should we apply it?
- If the deposits occur at the end of the year instead of at the beginning of the year, how should you calculate the simple interest rate?
Can you please answer me this question by mentioning appropriate formulas to use?
Thanks,
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