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Time Value of Money 5. Suppose you make 3 deposits of $1,000 per year into an account that pays 12% p.a. compounded annually. If the
Time Value of Money
5. Suppose you make 3 deposits of $1,000 per year into an account that pays 12% p.a. compounded annually. If the first deposit is made today, how much will you have in the account three years from now? 6. Sue wants to save $5,000 for a European vacation. Her savings plan entails making 12 monthly deposits, starting one month from today, into an account that pays 1% per month. If the plan is to leave for Europe exactly 12 months from today, what must be the dollar amount of each of the 12 deposits? 7. You take out a loan and must make 3 payments of $2,000 per year to the bank. The interest rate is 15% p.a. compounded annually. If the first payment is made one year from today, then how much have you borrowed? 8. Now suppose the first loan payment will be made 2 years from today. What is the amount of the loanStep by Step Solution
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