An investor deposits $1000 at the beginning of each year for five years in a fund earning 5% effective. The interest from this fund can be reinvested at only 4% effective. Show that the total accumulated value at the end of ten years is 1250($111.04 - $1.04 −1).
An investor deposits $1000 at the beginning of each year for five years in a fund earning 5% effective. The interest from this fund can be reinvested at only 4% effective. Show that the total accumulated value at the end of ten years is 1250($111.04 - $1.04 −1).
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 20P
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![An investor deposits $1000 at the beginning of each year for five years in a fund
earning 5% effective. The interest from this fund can be reinvested at only 4%
effective. Show that the total accumulated value at the end of ten years is
1250($111.04 - $1.04 −1).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F650513c1-09ce-4533-b330-2b829ce5e7eb%2Fd99de620-9f8f-4fbf-889b-b411f26f9f6d%2Fl43762q_processed.png&w=3840&q=75)
Transcribed Image Text:An investor deposits $1000 at the beginning of each year for five years in a fund
earning 5% effective. The interest from this fund can be reinvested at only 4%
effective. Show that the total accumulated value at the end of ten years is
1250($111.04 - $1.04 −1).
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