Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Your father has promised to give you Rs 2,00,000 in cash on your 30th birthday, today is your 21st birthday. He wants to know the following things: If he decides to make annual payments into a fund after one year, how much will each have to be if the fund pays 8 %? If he decides to invest a lump sum in the account after one year and let it compound annually, how much will the lump sum be? If he decides to invest a lump sum in the account now and let it compound annually, how much will the lump sum be? Assume 8% rate of interest in each case.
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Transcribed Image Text:Your father has promised to give you Rs 2,00,000 in cash on your 30th birthday, today is your 21st birthday. He wants to know the following things: If he decides to make annual payments into a fund after one year, how much will each have to be if the fund pays 8 %? If he decides to invest a lump sum in the account after one year and let it compound annually, how much will the lump sum be? If he decides to invest a lump sum in the account now and let it compound annually, how much will the lump sum be? Assume 8% rate of interest in each case.
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Step 1: Calculate annual payments
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Step 3: Calculate lump sum payment
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