trend has openned an RRSP account by making an initial deposit of $1000. he intends to make annual deposits for 15 years increasing at a constante rate of 2%. how much of the accumulated values just after the last deposit was made is interest if interest is 3.6% compounded annually? the amount of interest included in the accumulated value is $___
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- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
- Trent has opened an RRSP account by making an initial deposit of $900. He intends to make semi-annual deposits for 18 years increasing at a constant rate of 3.1%. How much of the accumulated value just after the last deposit was made is interest if interest is 8.7% compounded semi-annually?Suppose that $10,000 is deposited into a saving account that earns 6% interest, compounded annually.a) Assuming that no additional deposits or withdrawals are made, use the appropriate compound interestfactors to determine how much the account will be worth:i) After 5 years;ii) After 20 years. b) Verify that your answers in part (a) are correct by constructing a table or spreadsheet that shows howthe initial deposit will grow each year over 20 years. At a minimum, your table or spreadsheet shouldinclude a row for each year and show: the amount of money in the savings account at the start of each year. the amount of interest earned each year; and the amount of money in the savings account at the end of each year, after interest is paid.Be sure to briefly explain how your table or spreadsheet verifies your results from part (a). c) Again assuming that no additional deposits or withdrawals are made, how many years will it take untilthere is at least $50,000 in the account?James made an initial deposit into an account of $1,000 at time t = 0, followed by five annual deposits of $200 at times t = 1,2, 3, 4, 5. James will receive payments from the account at times t = 7, 8, 9, starting at $1,500 and decreasing by $X per year. The balance in the account after the last payment is $0. Determine X given an effective annual interest rate of 7%. Hint: Sketch a time diagram to see the payments. Possible Answers A $490 but < $530 D 2 $530 but < $570 E 2$570
- You plan to accumulate R450,000 over a period of 12 years by making equal annual deposits in an account that pays an annual interest rate of 9% (assume all payments will occur at the beginning of each year). What amount must you deposit each year to reach your goal?When you buy a certificate of deposit (CD), you are investing your money in an account that earns interest for a specific period of time. A CD matures when it has been invested for the required amount of time. Assume that you have $2300 to invest in a 5-year CD with an APR of 3% compounded daily. When the CD matures, how much interest will you have earned? Round your result to the nearest cent. $You plan to make 15 annual deposits in a saving account that pays 6% interest compounded annually. If the first deposit of $1,200 is made al the end of the first year and each subsequent deposit is $400 more than the previous one, the value of the account at the end of 15 years will be nearly:(a) $87,021(b)$92,242(c) $97,777(d) $83,104
- You are planning to start a business in 5 years. You have decided to deposit Shs. 400,000 in a fixed deposit account whose interest rate is 8% p.a. Required: Compute the approximate value in your account after the investing period if interest is compounded semi-annually.Assume that you will be opening a savings account today by depositing $125,000. The savings account will pay you 7.5% annual interest compounded quarterly, and this rate is assumed to remain in effect for all future periods. Five years from now you will withdraw R dollars. You will continue to make additional withdrawals of R dollars for a while longer – making your last withdrawal at the end of year 12 – to achieve the required pattern of withdrawals. How large must R be to leave you with exactly a zero balance after your final withdrawal is made at the end of year 12?Compute and compare the following interests situations if you deposit $2500 into an account with 3.5% interest for 10 years. 20) The account pays simple interest. 21) The account pays compounding interest monthly. 22) The account pasy continuously compounding interest. 23) How much difference is there between the three different types of interest? Explain.