7. Suppose you find an investment account that you decide to contribute to every month over the course of 30 years. The investment has an average rate of return of 5.2%, compounding daily. Also, you decide to start the account with an initial amount of $10,000, and that your monthly contributions will be $1000. How much is the account worth after 30 years? Suppose, for the sake of simplicity that the account compounds continuously, and that your contributions to the account are spread out evenly (continuously) over the course of the year.
7. Suppose you find an investment account that you decide to contribute to every month over the course of 30 years. The investment has an average rate of return of 5.2%, compounding daily. Also, you decide to start the account with an initial amount of $10,000, and that your monthly contributions will be $1000. How much is the account worth after 30 years? Suppose, for the sake of simplicity that the account compounds continuously, and that your contributions to the account are spread out evenly (continuously) over the course of the year.
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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Transcribed Image Text:7. Suppose you find an investment account that you decide to contribute to every month over the course
of 30 years. The investment has an average rate of return of 5.2%, compounding daily. Also, you decide
to start the account with an initial amount of $10,000, and that your monthly contributions will be
$1000. How much is the account worth after 30 years? Suppose, for the sake of simplicity that the
account compounds continuously, and that your contributions to the account are spread out evenly
(continuously) over the course of the year.
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