1. Given the following varied interest rates: 6% compounded monthly during the first year, 2% perquarter during the second and third years, and 10% per year throughout the remaining years, how muchshould you invest today (P) to have $ 1M five years from now?2. For five years, a series of equal payments of $50,000 is received quarterly. The quarterly paymentsdouble in size after these five years and continue for another ten years. Calculate the single presentamount (P) equivalent to the series of payments received over the 15-year period if the interest rate is:a. 12% compounded monthlyb. 12% compounded annually

The formula for present value: P=FP/F,i,n Where (P/F,i,n)=11+in Here i is the rate of interest per…

1. Given the following varied interest rates: 6% compounded monthly during the first year, 2% per quarter during the second and third years, and 10% per year throughout the remaining years, how much should you invest today (P) to have $ 1M five years from now?

1. Given the following varied interest rates: 6% compounded monthly during the first year, 2% per quarter during the second and third years, and 10% per year throughout the remaining years, how much should you invest today (P) to have $ 1M five years from now?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Given the following varied interest rates: 6% compounded monthly during the first year, 2% per
quarter during the second and third years, and 10% per year throughout the remaining years, how much
should you invest today (P) to have $ 1M five years from now?
2. For five years, a series of equal payments of $50,000 is received quarterly. The quarterly payments
double in size after these five years and continue for another ten years. Calculate the single present
amount (P) equivalent to the series of payments received over the 15-year period if the interest rate is:
a. 12% compounded monthly
b. 12% compounded annually

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