Suppose that the parents of a young child decide to make annual deposits into a saving account, with the first deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday (EOY), four withdrawals will be made. The sequence of the amounts of withdrawals is $2000, $2400, $2800, and $3200. If the effective annual interest rate is 8% during this period, what are the annual deposits in years 5 through 15? Use a uniform gradient amount in your solution and support your work by drawing the cash flow diagram. Draw the cash flow diagram and solve the problem. Upload your answer in the moodle. Answer:

Suppose that the parents of a young child decide to make annual deposits into a saving account, with the first deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday (EOY), four withdrawals will be made. The sequence of the amounts of withdrawals is $2000, $2400, $2800, and $3200. If the effective annual interest rate is 8% during this period, what are the annual deposits in years 5 through 15? Use a uniform gradient amount in your solution and support your work by drawing the cash flow diagram. Draw the cash flow diagram and solve the problem. Upload your answer in the moodle. Answer:

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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Similar questions

A person wishes to deposit $5,000 per year in a savings account which earns interest of 8 percent per year compounded annually. Assume the first deposit is made at the end of this current year and additional deposita at the end of each following year. (a) To what sum will the investment grow at the time of the 10th deposit? (b) How much interest will be earned?
You want to be able to withdraw $4500 from an account at the end of each 6-month period (that is, twice a year) for the next 11 years. How much money should you invest now into an account earning 4.1% interest per year, compounded every 6 months, in order to fund the desired withdrawals? Assume the account is empty after the last withdrawal is made. Give the answer correctly to 2 decimal places. The amount to invest now is ______ dollars.
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.
Anna borrows 188000 from a bank for a term of 21 years. The loan is to be repaid by level annual repayments, paid in arrears, and the interest rate is 5% per annum effective. Calculate the capital outstanding immediately after the 6th payment. Give your answer to two decimal places.
You borrow 112000 for 10 years from a bank in order to renovate your flat. The effective interest rate charged by the bank is 7.6% per annum. The loan is to be repaid by level annual repayments, paid in arrears. Calculate the annual repayment. Give your answer to two decimal places.
Suppose you take on a loan that is subject to an annual interest rate of 12%, with the interest rate being calculated at the end of each month. Two years later you pay back the loan in full by making a payment of $1,020. What was the original amount of the loan?
You have decided to open a savings account and put $9000 in your local bank at an interest rate of 0.6% APR, which is compounded monthly. About how much money will you have in the saving account at the end of 8 years. $______________________________________________
Nick set up a savings plan with CIBC whereby he deposits $337 at the end of each quarter for 4 years. Interest throughout the 4-year time period is 1.58% compounded quarterly. The amount in his account at that time will become a term deposit withdrawable after a further 9 years, where interest changes to 4.58% compounded semi-annually. Calculate the total interest earned on the investment. Round your answer to the nearest dollar. Full solution to this problem required.
Suppose that you are about to borrow $10,000 from a bank. Suppose you will be repaying using end-of-year annual payments. What will be your annual uniform payment over 8 years with 10% nominal interest compounded monthly? What will be your annual uniform payment over 7 years with 10% nominal interest compounded continuously?
You are going to make the following contributions into a savings account: Year 1: $0 (1 year from today) Year 2: $1000 Year 3: $1000 Year 4: $2000 Year 5: $0 Year 6: $0 The account will earn 7.23% in interest per year. How much will be in the account exactly 6 years from today? To nearest $0.01

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