The following cash flow diagram indicates the monthly payments you will have in the future. Assume that the interest rate is 12% рет уеаrг. $3,200 $2.900 $2,400 $2.000 16 17 I8 19 20 21 ) What annual amount should you save for the first 7 months to complete the following payments starting from 18th month, if you expect your parents to also deposit into your account $1000 at the beginning of month 27 b) )Explain how your answers to (a) will change if the interest rate increases. Write your comments in your words

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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The following cash flow diagram indicates the monthly payments you will have in the future. Assume that the interest rate is 12%
per year.
$3,200
$2,800
$2,400
$2.000
16 17
18 19 20 21
) What annual amount should you save for the first 7 months to complete the following payments starting from 18th month, if you
a)
expect your parents to also deposit into your account $1000 at the beginning of month 2?
b)
)Explain how your answers to (a) will change if the interest rate increases. Write your comments in your words
Transcribed Image Text:The following cash flow diagram indicates the monthly payments you will have in the future. Assume that the interest rate is 12% per year. $3,200 $2,800 $2,400 $2.000 16 17 18 19 20 21 ) What annual amount should you save for the first 7 months to complete the following payments starting from 18th month, if you a) expect your parents to also deposit into your account $1000 at the beginning of month 2? b) )Explain how your answers to (a) will change if the interest rate increases. Write your comments in your words
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