. $1,000 are deposited in the fund at the end of each of the first 10 years. This means that this is an example of annuity-immediate. Compute for the accumulated value of the fund in the first 10 years. Call this T. b. The value of the fund in the first 10 years is T . Solve for the future value of T at the end of the next 10 years. Use the formula Future value = P (1 + i) t. Call this answer FV . (2 points) c. The target amount of the investor is $50,000. The investment made in the first 10 years alone will grow to the value FV at the end of 20 years. So, in the second 10 years, the accumulated value of the investment must be $50, 000 − FV . What is this value? Call this U
An investor wants to accumulate $50,000 in a fund at the end of 20 years. If the investor deposit
$1,000 in the fund at the end of each of the first 10 years and $1, 000 + X at the end of each of
the second 10 years, find the value of X if the fund earns 7% effective. Do the following steps to
answer this problem:
a. $1,000 are deposited in the fund at the end of each of the first 10 years. This means that
this is an example of
the first 10 years. Call this T.
b. The value of the fund in the first 10 years is T . Solve for the
the next 10 years. Use the formula Future value = P (1 + i) t. Call this answer FV . (2
points)
c. The target amount of the investor is $50,000. The investment made in the first 10 years
alone will grow to the value FV at the end of 20 years. So, in the second 10 years, the
accumulated value of the investment must be $50, 000 − FV . What is this value? Call this
U .
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