If you want to withdraw $20,000 at the end of two years and $55,000 at the end of four years, how much should you deposit now into an account that pays 12 % interest compounded MONTHLY?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter19: The Basic Tools Of Finance
Section: Chapter Questions
Problem 1CQQ
icon
Related questions
Question

If you want to withdraw $20,000 at the end of two years and $55,000 at the end of four years,
how much should you deposit now into an account that pays 12 % interest compounded MONTHLY? See the accompanying cash flow diagram.

0
P=?
1
$20,000
2
Years
3
$55,000
Transcribed Image Text:0 P=? 1 $20,000 2 Years 3 $55,000
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Present Discounted Value
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning