You need $150,000 at the end of the 20th year. You are thinking about two ways of saving the money. Both saving options provide you with 7 percent annually compounded interest rate. a. You are considering one lump-sum payment today . To achieve your objective of $150,000 at the end of the twenty-year period, what should this sum be? b. You can also decide for annual payments. Your first payment is to be made at the end of the first year and the final payment is to be made at the end of the 20th year. What amount must you plan to pay annually to achieve your objective?

You need $150,000 at the end of the 20th year. You are thinking about two ways of saving the money. Both saving options provide you with 7 percent annually compounded interest rate. a. You are considering one lump-sum payment today . To achieve your objective of $150,000 at the end of the twenty-year period, what should this sum be? b. You can also decide for annual payments. Your first payment is to be made at the end of the first year and the final payment is to be made at the end of the 20th year. What amount must you plan to pay annually to achieve your objective?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 23P

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