Suppose that the parents of a young child decide to make annual deposits into a savings account, with the first deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday, the withdrawals as shown on the diagram below will be made. If the effective annual interest rate is 10% during this period of time, what are the annual deposits in years 5 through 15? Use a uniform gradient amount (G) in your solution. A Click the icon to view the diagram for cash flows.

Suppose that the parents of a young child decide to make annual deposits into a savings account, with the first deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday, the withdrawals as shown on the diagram below will be made. If the effective annual interest rate is 10% during this period of time, what are the annual deposits in years 5 through 15? Use a uniform gradient amount (G) in your solution. A Click the icon to view the diagram for cash flows.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

An engineer wishes to set up a special fund by making uniform semiannual start-of-period (period 0) deposits for 10 years. The fund is to provide 300,000 at the end of each year of the last five years of the 10-year period. If interest is 8% compounded yearly, what is the required semiannual deposit to be made?
Suppose you put $20,000 in an investment account today that earns 3% per year (compounded annually), how much will you have in 10 years Suppose you are offered an investment that will pay you $900 a month for 20 years. If your required return is 3% per year, compounded monthly, what would you be willing to pay for this investment?
If a nominal interest rate of 8% is compounded continuously, determine the unknown quantity in each of the following situations: a. What uniform EOY amount for 11 years is equivalent to $9,000 at EOY 11? b. What is the present equivalent value of $950 per year for 13 years? c. What is the future equivalent at the end of the sixth year of $232 payments made every six months during the six years? The first payment occurs six months from the present and the last occurs at the end of the sixth year. d. Find the equivalent lump-sum amount at EOY nine when P = $900. Click the icon to view the interest and annuity table for continuous compounding when i = 8% per year. a. The uniform EOY amount is $ (Round to the nearest dollar.) b. The present equivalent value $950 per year for 13 years is $ c. The future equivalent is $ (Round to the nearest dollar.) d. The equivalent lump-sum amount is (Round to the nearest dollar.) (Round to the nearest dollar.)
4. A garment company has a contract to stone-wash Wrangler Jeans. Its operating costs are $22,000 per machine in Years 1 and 2, then they increase by 8% per year through Year 10. What is the equivalent present worth (at Time 0) of the operating costs at an interest rate of 10% per year. 5. Repeat the previous problem assuming an interest rate of 8% per year, instead.
Q 6 please
Suppose that a father, on the day his son is born, wishes to determine what lump amount would have to be paid into an account bearing interest of 17% per year to provide withdrawals of $4,000 on each of the son's 9th, 10th, 11th, and 12th birthdays. How much money does the father have to deposit on the day his son is born ? Please, represent the cash-flow diagram.
How much invested now at 8% would be just sufficient to provide three payments, with the first payment in the amount of $9,000 occurring two years hence, then $6,000 five years hence, and finally $3,000 seven years hence? Click the icon to view the interest factors for discrete compounding when i = 8% per year. The invested amount should be $ (Round to the nearest dollar.)
Suppose you start saving for retirement when you are 45 years old. You invest $5,200 the first year and increase this amount by 2% each year to match inflation for a total of 15 years. The interest rate is 7% per year. How much money will you have saved when you are 60 years old? Click the icon to view the interest and annuity table for discrete compounding when i = 2% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 7% per year. When you are 60 years old, you will have saved $. (Round to the nearest dollar.)
Suppose that the parents of a young child decide to make annual deposits into a saving account, with the first deposit being made on the child's fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child's 18th birthday (EOY), four withdrawals will be made. The sequence of the amounts of withdrawals is $2000, $2400, $2800 and $3200. If the effective annual interest rate is 8% during this period, what are the annual deposits in years 5 through 15? Use a uniform gradient amount in your solution and support your work by drawing the cash flow diagram .Draw the cash flow diagram and solve the problem.
Using the formula, not the table
Question 2 If an interest rate is 18% per year, compounded quarterly, what is the effective quarterly interest rate
If P15,000 is invested in a bank today with a simple interest rate of 9% annually, how much will it become after seventeen months?