James Horner is considering aninvestment scheme, to fund his house purchase after 6 years, withfollowing cash deposits for a period of 6 years.
Year | 1 | 2 | 3 | 4 | 5 | 6 |
Cash deposit ($) | 10,000 | 12,000 | 14,000 | 16,000 | 18,000 | 20,000 |
- The rate of interest on the deposits is 9% per annum. If Jamesrequires an amount of $115,000 at the end of 6 years to purchasethe property, how much will be the shortfall or surplus of thisinvestment scheme? Show all the necessary calculations
- If the rate of interest increases to 11%, what will be thesurplus/shortfall
- What will be your answer for a) above, If James deposits at thebeginning of each year, instead of depositing at the end of theyear?
