(b) The a pound interest and the account earns 9% interest compounded annually,
ID: 1226947 • Letter: #
Question
(b) The a pound interest and the account earns 9% interest compounded annually, what will be the on the account the end of the 15 years (F)? the balance 2.34 If S400 is deposited in a savings account t the beginning of each year for ls gh ad the Linear Gradient Series pounded annually. The size of her bonus increases by $2,000 each initial bonus amount is $5,000. Determine how much will be in the account diately after the fifth deposit. 2.35 Kim deposits her annual bonus into a savings account that pays 8% interest nt imme made into a fund that pays interest at a rate of 9% compounded annual e Determine the amount in the fund immediately after the fifth deposit. 2.36 Five annual deposits in the amounts of $1,200, $1,000, $800, $600, and $400 2.37 Compute the value of P for the accompanying cash flow diagram. Assume 8%. 350 $200 $150 i1 2 34 5 6 7 8 9 10 11 Years 2.38 What is the equal-payment series for 10 years that is equivalent to a payment series starting with $15,000 at the end of the first year and decreasing by $3,000 each year over 10 years? Interest is 9% compounded annually. first year and to increase $250 each year for the following eight years. What present sum of money should be set aside now to pay for the required mainte- nance expenses over the eight-year period? (Assume 9% compound interest per year.) 2.39 The maintenance expense on a machine is expected to be $1,000 during the 2.40 Consider the cash flow series given in the accompanying table. Which of the fol- lowing values of C makes the deposit series equivalent to the withdrawal seriesat an interest rate of 12% compounded annually? (a) C $200.00 (b) C = $282.70Explanation / Answer
It is a case of future value of arithmetic gradient.
Initial deposit = $5000
Yearly increase = $2000
No. of years (n) = 5 years
Annual interest rate (R) = 8%
Thus, Future value of arithmetic gradient = 2000*((1+R)^n – R*n – 1)/R^2
Future value of arithmetic gradient = 2000*(1.08^5 – 5*.08 – 1)/.08^2 = $21665.02
Future annuity value of common Amount of $5000 = 5000*(1.08^5 – 1)/.08 = $29333
Total future value of the bonus = $29333 + $21665.02
Total future value of the bonus = $50998.02
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