1.Assume that you deposit $ 1,605 each year for the next 15 years into an accoun

Question

1.Assume that you deposit $ 1,605 each year for the next 15 years into an account that pays 10 percent per annum. The first deposit will occur one year from today (that is, at t = 1) and the last deposit will occur 15 years from today (that is, at t = 15). How much money will be in the account 15 years from today? (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).

2.How much must you deposit in an account today so that you have a balance of $ 14,202 at the end of 13 years if interest on the account is 9 % p.a., but with quarterly compounding? (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).

3.The Milken Company is offering you an investment that promises you $10,000 at the end of 11 years if you invest $ 5,003 today. What is the annual return on this investment? (Compute your answer as a percent rounded to 2 decimal places. Record without a percent sign. For example, record .0848765 = 8.48765% as 8.49)

Explanation / Answer

1) FV(10%,15,$1605,,1) = 56,094.32

2) int rate = 9/4%; n = 13*4 quarters = 52 quarters

FV= $ 14,202

PV = 14202/(1 + 9/4%)52 = 4,465.37

3) PV = $ 5,003

   FV = $10,000

n = 11 years

10,000 = 5,003 * (1 + i)11

i = 6.50%

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