Suppose you make equal quarterly deposits of $2,500 into a fund that pays interestat a rate of 5% compounded monthly. Find the balance at the end of year 3.Hint: You will need an effective interest rate in your calculations. As a proportion,round this value to 4 places after the decimal when you use this in subsequentcalculations.Note: Note: When entering your answer, do not use any dollar symbols or any otherunits. Enter only the value rounded to the nearest integer (nearest dollar). Also, forlonger values, do not use any commas.

Time value of money (TVM) refers to the method used to measure the amount of money at different…

Answered: Suppose you make equal quarterly…

Suppose you make equal quarterly deposits of $2,500 into a fund that pays interest at a rate of 5% compounded monthly. Find the balance at the end of year 3.

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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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Suppose you make equal quarterly deposits of $2,500 into a fund that pays interest
at a rate of 5% compounded monthly. Find the balance at the end of year 3.
Hint: You will need an effective interest rate in your calculations. As a proportion,
round this value to 4 places after the decimal when you use this in subsequent
calculations.
Note: Note: When entering your answer, do not use any dollar symbols or any other
units. Enter only the value rounded to the nearest integer (nearest dollar). Also, for
longer values, do not use any commas.

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