33- A citizen annually deposits the amount of R$1,000.00 at the end of each calendar year, in a bank that pays compound interest of 10% p.a. What will be this investor's credit balance immediately before his fourth annual deposit is made?
33- A citizen annually deposits the amount of R$1,000.00 at the end of each calendar year, in a bank that pays compound interest of 10% p.a. What will be this investor's credit balance immediately before his fourth annual deposit is made?
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
Problem 1PS
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33- A citizen annually deposits the amount of R$1,000.00 at the end of each calendar year, in a bank that pays
Expert Solution
Introduction and Formula
Solution:-
When an equal amount is deposited each period at end of period, it is called ordinary annuity.
We know, future value of ordinary annuity = PMT x [(1+r)n – 1] / r
where, PMT = equal periodic payments
r = periodic interest rate
n = number of periods
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