Question
You deposit $800 today in a bank account A with 5% annual effective interest. The interest payments will be deposited into another bank account B
You deposit $800 today in a bank account A with 5% annual effective interest. The interest payments will be deposited into another bank account B earning 10% effective interest. The interest earned in the account B will be invested in another bank account C with 8% annual effective interest. Assume that all interest will be paid annually.
(a) Calculate the total amount deposited into the account B in the first 5 years, including at the end of the 5th year. (For example, if $10 is deposited at t = 2 and $20 is deposited at t = 5, the total amount is $30 regardless of interest. It is neither the present value nor the accumulated value.)
(b) Calculate the total amount deposited into the account C in the first 5 years, including at the end of the 5th year. (The same comments as (a) apply.)
(c) Calculate the total accumulated value of the three accounts 5 years from now.
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