You are chairperson of the investment fund for Middle Hockey League. You are asked to set up a fund of quarterly payments to becompounded quarterly to accumulate a sum of $410,000 after 10 years at an 8 percent annual rate (40 payments). The first paymentinto the fund is to occur three months from today, and the last payment is to take place at the end of the 10th year. Use Appendix Aand Appendix C. (Round "FV Factor" to 3 decimal places. Round your intermediate calculations to the nearest whole dollars.Round the final answers to the nearest whole dollar.)a. Determine how much the quarterly payment should be.Quarterly payment$5,437.57 ✪b. On the day after the sixteenth payment is made (the end of the fourth year) the interest rate goes up to a 12 percent annual rate, andyou can earn a 12 percent annual rate on funds that have been accumulated as well as all future payments into the fund. Interest is tobe compounded quarterly on all funds. Determine how much the revised quarterly payments should be after this rate change (thereare 24 payments and compounding dates). The next payment will be in the fourth quarter of the fourth year.Revised quarterly payments$8,243.50

Future value: $410,000Number of years: 10Interest rate: 8%Interest rate per quarter: 8%/4=2%Number…

Answered: You are chairperson of the investment…

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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