An engineering graduate starts a new job at $68,000 per year. Her investments are deposited at the end of the year into a mutual fund that earns a nominal interest rate of 5% per year with quarterly compounding. How much money will be in the account immediately after she makes the last deposit? (a) She makes $4000 annual deposits for the next 40 years. (b) She makes the $4000 deposits for 10 years, then stops all investments for the next 10 years, and then resumes deposits of $6000 per year for the next 20 years.
An engineering graduate starts a new job at $68,000 per year. Her investments are deposited at the end of the year into a mutual fund that earns a nominal interest rate of 5% per year with quarterly compounding. How much money will be in the account immediately after she makes the last deposit? (a) She makes $4000 annual deposits for the next 40 years. (b) She makes the $4000 deposits for 10 years, then stops all investments for the next 10 years, and then resumes deposits of $6000 per year for the next 20 years.
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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An engineering graduate starts a new job at $68,000 per year. Her investments are deposited at the end of the year into a mutual fund that earns a nominal interest rate of 5% per year with quarterly compounding. How much money will be in the account immediately after she makes the last deposit? (a) She makes $4000 annual deposits for the next 40 years. (b) She makes the $4000 deposits for 10 years, then stops all investments for the next 10 years, and then resumes deposits of $6000 per year for the next 20 years.
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