Eleanor makes year-end deposits of 500 the first year, 550 the second year, 605 the third year, and so on increasing the next year’s deposit by 10% of the deposit in the preceding year until the end of the 10th year. Ronald makes equal year-end deposits of 700 each year for 10 years. A.) Is the gradient of Eleanor’s payments increasing or decreasing? B.) If interest on both funds is 12% compounded annually, who will be able to save more at the end of 10 years?

Eleanor makes year-end deposits of 500 the first year, 550 the second year, 605 the third year, and so on increasing the next year’s deposit by 10% of the deposit in the preceding year until the end of the 10th year. Ronald makes equal year-end deposits of 700 each year for 10 years. A.) Is the gradient of Eleanor’s payments increasing or decreasing? B.) If interest on both funds is 12% compounded annually, who will be able to save more at the end of 10 years?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 15E

See similar textbooks

Similar questions

Amanda makes year-end deposits of P500 the first year, P550 at the second year, P605 at the third year, and so on. increasing the next year's deposit by 10% of the deposit in the preceding year until the end of the tenth year. Arnold makes equal year-end deposits of P700 each year for 10 years. If interest on both funds is 12% compounded annually, how much is the difference between the savings of Amanda and Arnold? 518.54 620.75 536.56 490.79 527.67 441.91
Troy Long wishes to deposit a single sum of money in a savings account so that five equal annual withdrawals of $2,000 can be made before depleting the fund. If the first withdrawal is to occur 1 year after the deposit and the fund pays interest at a rate of 5% compounded annually, how much should he deposit? suppose the first withdrawal does not occur until 3 years after the deposit. How much should be deposited?
Ms Oksana Doe has just inherited an investment account worth $2,800,000 from her grandparents. The fund earns an annual interest rate of 6%. She plans to make uniform annual withdrawals from the account over the next 25 years. Answer the following two questions: 1. How much will each annual withdrawal be? OA. $223,160 OB. $47,320 OC. $50,960 OD. $232,120 OE. $218,960 2. What will be the balance in the account immediately after making the 8th annual withdrawal? OA. $1,359,698 OB. $1,048,320 OC. $2,294,110 O D. $2,431,991
A saver plans to make 25 deposits of 100 at the end of each year. If the interest rate were 6% effective per annum, he would accumulate a fund of amount F on the date of the last payment. The saver makes the first 10 deposits of 100. However, the account only credits an effective annual interest rate of 5%. Therefore, the saver determines that he must increase each of the remaining 15 deposits to X so that he can accumulate the desired fund of F. Assuming that the fund continues to earn 5% effective annual interest, find X.
Arnie agrees to contribute $2,300 to the road fund at the end of each year for the next 12 years. Jack wants to match Arnie's contribution, but he wants to make a lump-sum contribution today. If the current interest rate is 3.5% compounded annually, how much should Jack deposit to equal Arnie's annual deposits? (Round your answer to the nearest cent.)
Joe deposits GHS10 today and another GHS30 in five years into a fund paying simple interest of 11% per year. Tina will make the same two deposits, but the GHS10 will be deposited n years from today and the GHS30 will be deposited 2n years from today. Tina’s deposits earn an annual effective rate of 9.15%. At the end of 10 years, the accumulated amount of Tina’s deposits equals the accumulated amount of Joe’s deposits. Calculate n. (
Suppose you make an annual contribution of P9,993 each year to a college fund for a niece. He is 6 years now, and you will start next year and make the last deposit when he is 19. The fund is a money market account earning 6.74% per year. What will it be worth immediately after the last deposit?
(d) Gabrielle needs $200,000 in eight years. She has set up a sinking fund that earns 5% compounded monthly in order to have the amount in eight years? (1) How much should she deposit each month? (ii) How much interest is earned over the period?
Your friend bought $7,000 worth of mutual funds with a redemption fee of 8 percent if she sells within the first year. It decreases 1 percent each year afterward. If she sells during the third year, how much will she pay in redemption fees?
Suppose Jennifer deposits $500 in an account at the end of this year. $400 at the end of the next year, and $300 at the end of the following year. If her opportunity cost rate is 7.5 percent, (a) how much will be in the account immediately after the third deposit is made? (b) How much will be in the account at the end of three years if the deposits are made at the beginning of each year?
Suppose your parents decide to give you $10,000 to be put in a college trust fund that will be paid in equally quarterly installments over a 5 year period. If you deposit the money into an account paying 1.5% per quarter, how much are the quarterly payments (Assume the account will have a zero balance at the end of period.)
Aylene is preparing for an income fund for her retirement. She wants to receive 15,000 pesos quarterly for the next 25 years starting 1 month from now. The income fund pays 10.5% compounded monthly. How much Aylene deposit now to pay for the annuity? (Show solution)