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3. An individual makes 6 annual deposits of P2,000 in a savings account that pays interest rate of 4% compounded annually. Two years after making the last deposit, the interest rate changes to 7% compounded annually. Ten years after the last deposit, the accumulated money is withdrawn from the account. How much is withdrawn?

3. An individual makes 6 annual deposits of P2,000 in a savings account that pays interest rate of 4% compounded annually. Two years after making the last deposit, the interest rate changes to 7% compounded annually. Ten years after the last deposit, the accumulated money is withdrawn from the account. How much is withdrawn?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. A person wishes to accumulate P2,500 over a period of 15 yrs so that a cash payment can be made for a new roof on a summer cottage. To have this amount when it is needed, annual payments will be made into a savings account that earns 8% interest per year. How much must each annual payment be? Draw a cash flow diagram. 2. Mrs. X has just purchased a new car for 1M. She makes a down payment of 30% of the negotiated price and then makes payments of P15,000 per month thereafter for 60 months. Furthermore, she believes the car can be sold for P750,000 at the end of 3 years. Draw a cash flow diagram of this situation from Mrs. X's point of view. 3. An individual makes 6 annual deposits of P2,000 in a savings account that pays interest rate of 4% compounded annually. Two years after making the last deposit, the interest rate changes to 7% compounded annually. Ten years after the last deposit, the accumulated money is withdrawn from the account. How much is withdrawn? 4. What value of N comes closest to making the upper cash flow diagram (a) equivalent to the one below (b)? Let i = 15% per annum. Years N=? (a)
Transcribed Image Text:1. A person wishes to accumulate P2,500 over a period of 15 yrs so that a cash payment can be made for a new roof on a summer cottage. To have this amount when it is needed, annual payments will be made into a savings account that earns 8% interest per year. How much must each annual payment be? Draw a cash flow diagram. 2. Mrs. X has just purchased a new car for 1M. She makes a down payment of 30% of the negotiated price and then makes payments of P15,000 per month thereafter for 60 months. Furthermore, she believes the car can be sold for P750,000 at the end of 3 years. Draw a cash flow diagram of this situation from Mrs. X's point of view. 3. An individual makes 6 annual deposits of P2,000 in a savings account that pays interest rate of 4% compounded annually. Two years after making the last deposit, the interest rate changes to 7% compounded annually. Ten years after the last deposit, the accumulated money is withdrawn from the account. How much is withdrawn? 4. What value of N comes closest to making the upper cash flow diagram (a) equivalent to the one below (b)? Let i = 15% per annum. Years N=? (a)
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