An investment of 1000 is to be used to make payments of 100 at the end of every year for as long as possible. If the fund earns an annual effective rate of interest of 6%, find how many regular payments can be made. Also, find the amount of the smaller payment to be paid on the date of the last regular payment to be paid one year after the last regular payment

An investment of 1000 is to be used to make payments of 100 at the end of every year for as long as possible. If the fund earns an annual effective rate of interest of 6%, find how many regular payments can be made. Also, find the amount of the smaller payment to be paid on the date of the last regular payment to be paid one year after the last regular payment

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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Similar questions

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An award is being established, and it will pay $11,000 every four years, with the first installment being paid in four years. The award will be given for an indefinitely long period of time. If the interest rate is 2% per annum, what lump-sum amount of money (invested now) will be required to endow this award forever?
6) 10,000 is paid to buy an annuity-immediate with 10 level annual payments at an annual effective rate of 10%. The payments are deposited right away into a fund earning an annual effective rate of 9%. What is the total accumulated value of the investment at the end of the 10th year?
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A lump sum S deposited into either fund X or fund Y will be exactly sufficient to provide a perpetuity of $100 per year with the first payment due at the end of one year. Fund X will earn interest at an effective annual rate of 10% for the first 30 years and 6% thereafter. Fund Y will earn interest at a level effective annual rate of j. In which of the following ranges is j? someone help?

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