Alex receives level payments at the beginning of each year for 5 years. He deposits the payments into a fund. The deposits earn an annual effective interest rate of 6%, which is paid at the end of each year. The interest is immediately reinvested at an annual effective interest rate of 3%. At the end of 5 years, the accumulated value in the fund is 800. Calculate the amount of each level payment. a. 137.74 b. 150.42 c. 142.39 d. 150.67 e. 134.75
Alex receives level payments at the beginning of each year for 5 years. He deposits the payments into a fund. The deposits earn an annual effective interest rate of 6%, which is paid at the end of each year. The interest is immediately reinvested at an annual effective interest rate of 3%. At the end of 5 years, the accumulated value in the fund is 800. Calculate the amount of each level payment. a. 137.74 b. 150.42 c. 142.39 d. 150.67 e. 134.75
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 15E
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Alex receives level payments at the beginning of each year for 5 years. He deposits the
payments into a fund. The deposits earn an annual effective interest rate of 6%, which is paid at
the end of each year. The interest is immediately reinvested at an annual effective interest rate
of 3%.
At the end of 5 years, the accumulated value in the fund is 800. Calculate the amount of each
level payment.
a. 137.74
b. 150.42
c. 142.39
d. 150.67
e. 134.75
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