1. Carlo regularly deposits a certain amount K in a bank account which credits com- pound interest: a. If Carlo deposits K = 1,000 at the end of each month, how long exactly does he need to deposit until the amount in the fund reaches 20,000 if the compound interest rate is 5% per month?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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1. Carlo regularly deposits a certain amount K in a bank account which credits com-
pound interest:
a. If Carlo deposits K
1,000 at the end of each month, how long exactly does
he need to deposit until the amount in the fund reaches 20,000 if the compound
interest rate is 5% per month?
=
b. If Carlo, instead, intends to pay K at the beginning of each quarter for 4
years, how much should be this periodic payment if the sum of present values
of all these payments is 15,000 at a nominal interest rate of 8% compounded
quarterly?
Transcribed Image Text:1. Carlo regularly deposits a certain amount K in a bank account which credits com- pound interest: a. If Carlo deposits K 1,000 at the end of each month, how long exactly does he need to deposit until the amount in the fund reaches 20,000 if the compound interest rate is 5% per month? = b. If Carlo, instead, intends to pay K at the beginning of each quarter for 4 years, how much should be this periodic payment if the sum of present values of all these payments is 15,000 at a nominal interest rate of 8% compounded quarterly?
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