On her 23rd birthday. an engineer decides to start saving toward building up a retirement fund that pays 9% interest compounded quarterly (market interest rate). She feels that $800.000 worth of purchasing power in today's dollars will be adequate to see her through her sunset years after her 63rd birthday. Assume a general inflation rate of 5% per year. (a) If she plans to save by making 160 equal quarterly deposits, what should be the amount of each quarterly deposit in actual dollars?(b) If she plans to save by making end-of-the-year deposits, increasing by $1,000 over each subsequent year, how much would her first deposit be in actual dollars?
On her 23rd birthday. an engineer decides to start saving toward building up a retirement fund that pays 9% interest compounded quarterly (market interest rate). She feels that $800.000 worth of purchasing power in today's dollars will be adequate to see her through her sunset years after her 63rd birthday. Assume a general inflation rate of 5% per year. (a) If she plans to save by making 160 equal quarterly deposits, what should be the amount of each quarterly deposit in actual dollars?(b) If she plans to save by making end-of-the-year deposits, increasing by $1,000 over each subsequent year, how much would her first deposit be in actual dollars?
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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On her 23rd birthday. an engineer decides to start saving toward building up a retirement fund that pays 9% interest compounded quarterly (market interest rate). She feels that $800.000 worth of
(a) If she plans to save by making 160 equal quarterly deposits, what should be the amount of each quarterly deposit in actual dollars?
(b) If she plans to save by making end-of-the-year deposits, increasing by $1,000 over each subsequent year, how much would her first deposit be in actual dollars?
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