(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 interestcompounded 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 depositin 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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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You need to have $50,000 at the end of 10 years. To accumulate this sum, you havedecided to save a certain amount at the end of each of the next 10 years and deposit it inthe bank. The bank pays 8 percent interest compounded annually for long-term deposits.How much will you have to save each year (to the nearest dollar)?
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Explain well both question with paper answer.
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