Question
You invest money every 13 months. Your first payment of 1000 Euros occurs in 7 months and you make 29 payments. Payments increase by 2%
You invest money every 13 months. Your first payment of 1000 Euros occurs in 7 months and you make 29 payments. Payments increase by 2% each time (i.e.every 13 months). The constant annual interest rate is 1% on a yearly basis.
1. What is the present value of your saving plan today?
2. What is the final value of your saving, right after the last payment?
3. You pay every 2 months and your payment is constant. Your first and last payment dates are not modified. What should be the value of your first payment (in 7 months) to obtain the same final amount as in question 2?
4. You pay every 8 months and your payment increases by 2% each time. Your last payment date is not modified, but your first payment date occurs in 11 months. What should be the value of your first payment (in 11 months) to obtain the same final amount as in question 2?
5. You only pay every 2 months. Your last payment date is not modified, but your first payment date occurs in 1 month.
a. We assume that payments increase by 2% every 6 payments (i.e., every year): the first 6 payments are constant, then the 7th one increases by 2% and then the payments 8 to 12 are constant again, and so on and so forth. What should be the value of your first payment (in 1 month) to obtain the same final amount as in question 2?
b. The first payment is assumed to be equal to 50 euros. What should be the value of the interest rate to obtain the same final amount as in question 2? You invest money every 13 months. Your first payment of 1000 Euros occurs in 7 months and you make 29 payments. Payments increase by 2% each time (i.e. every 13 months). The constant annual interest rate is 1% on a yearly basis.
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