You would like to have $54,000 in 14 years. To accumulate this amount, you plan...
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Finance
You would like to have
$54,000
in
14
years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn
10
percent interest compounded annually. Your first payment will be made at the end of the year.
a.How much must you deposit annually to accumulate this amount?
b.If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn
10
percent on this deposit.)c.At the end of five years, you will receive
$20,000
and deposit this in the bank toward your goal of
$54,000
at the end of year
14.
In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn
10
percent on your deposits.)
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