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:28. Penny decides on her 30th birthday to start planning for her future by deposit $2000 at the end of
each year in an investment that pays 4%/a, compounded annually, until her 50th birthday. She then
leaves the money in the investment to collect interest at 5%/a compounded semiannually until her 65th
birthday.
a) Determine how much money she will have on her 65th birthday.
b) Penny's best friend, Susan, decides to wait until her 45th birthday to start planning for her
future. Susan can get the same rate of return (4%/a compounded annually) on her investment.
Find the yearly payment that she would be required to make until 65th birthday so that her
investment is equivalent to Penny's investment.
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