You decide to save $6800 by making semiannual deposits for 5 years into an account which pays 3% compounded semiannually. Once the payments stop, you plan to leave the money in the account for an additional 5 years. What size deposits do you need to make? The deposits need to be $ every six months. (Round to 2 decimal places.)
You decide to save $6800 by making semiannual deposits for 5 years into an account which pays 3% compounded semiannually. Once the payments stop, you plan to leave the money in the account for an additional 5 years. What size deposits do you need to make? The deposits need to be $ every six months. (Round to 2 decimal places.)
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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You decide to save $6800 by making semiannual deposits for 5 years into an account which pays 3% compounded semiannually. Once the payments stop, you plan to leave the money in the account for an additional 5 years. What size deposits do you need to make?
The deposits need to be $ every six months. (Round to 2 decimal places.)
Expert Solution
Step 1: Given Value
Compound = Semiannually = 2
Future Value after 10 years = fv $6800
Number of Deposit = n = 5 * 2 = 10
Interest Rate = r = 3 / 2 = 1.5%
Time = t = 5 * 2 = 10
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