Beginning 2 years from today, you deposit $1,500 per year for 18 years (18 deposits); for the following 24 years you deposit $2,000 in the first year and 3% more in each successive year. (That is, this series has 24 total deposits starting at $2,000 and growing at a 3% rate. For example, the second year’s deposit would be $2,060.) What is the present value today? (Use a 10% discount rate throughout.) What would you have in your account 35 years from today if every cash flow was compounded or discounted at 10%?
Beginning 2 years from today, you deposit $1,500 per year for 18 years (18 deposits); for the following 24 years you deposit $2,000 in the first year and 3% more in each successive year. (That is, this series has 24 total deposits starting at $2,000 and growing at a 3% rate. For example, the second year’s deposit would be $2,060.) What is the present value today? (Use a 10% discount rate throughout.) What would you have in your account 35 years from today if every cash flow was compounded or discounted at 10%?
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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Beginning 2 years from today, you deposit $1,500 per year for 18 years (18 deposits); for the following 24 years you deposit $2,000 in the first year and 3% more in each successive year. (That is, this series has 24 total deposits starting at $2,000 and growing at a 3% rate. For example, the second year’s deposit would be $2,060.) What is the
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