(iv) Continue with this logic and sum all the matured values expressed

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
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Question
Suppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r%
p.a. How much can be drawn at the end of the 5 years?
Approach
(i) The first $100 is contributed in one year's time and has to wait 4 years to "mature". Write an equation
describing this.
(ii) The second $100 is contributed in two year's time and has to wait 3 years to "mature". Write an equation
describing this.
(iii) The third $100 is contributed in three year's time and has to wait 2 years to "mature". Write an equation
describing this.
(iv) Continue with this logic and sum all the matured values expressed
Transcribed Image Text:Suppose $100 is invested at the end of each year for the next 5 years into an account paying an interest rate r% p.a. How much can be drawn at the end of the 5 years? Approach (i) The first $100 is contributed in one year's time and has to wait 4 years to "mature". Write an equation describing this. (ii) The second $100 is contributed in two year's time and has to wait 3 years to "mature". Write an equation describing this. (iii) The third $100 is contributed in three year's time and has to wait 2 years to "mature". Write an equation describing this. (iv) Continue with this logic and sum all the matured values expressed
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