Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:(Comprehensive problem) You would like to have $54,000 in 16 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 6 percent interest
compounded annually. Your first payment will be made at the end of the year.
a. How much must you deposit annually to accumulate this amount?
b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 6 percent on this deposit.)
c. At the end of five years, you will receive $20,000 and deposit this in the bank toward your goal of $54,000 at the end of year 16. In addition to the lump-sum deposit, how much must you deposit
in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 6 percent on your deposits.)
a. How much must you deposit annually to accumulate this amount?
(Round to the nearest cent.)
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