You need $150,000 at the end of the 20th year. You are thinking about two ways of saving the money. Both saving options provide you with 7 percent annually compounded interest rate. a. You are considering one lump-sum payment today . To achieve your objective of $150,000 at the end of the twenty-year period, what should this sum be? b. You can also decide for annual payments. Your first payment is to be made at the end of the first year and the final payment is to be made at the end of the 20th year. What amount must you plan to pay annually to achieve your objective?
You need $150,000 at the end of the 20th year. You are thinking about two ways of saving the money. Both saving options provide you with 7 percent annually compounded interest rate. a. You are considering one lump-sum payment today . To achieve your objective of $150,000 at the end of the twenty-year period, what should this sum be? b. You can also decide for annual payments. Your first payment is to be made at the end of the first year and the final payment is to be made at the end of the 20th year. What amount must you plan to pay annually to achieve your objective?
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 need $150,000 at the end of the 20th year. You are thinking about two ways of saving the money. Both saving options provide you with 7 percent annually
a. You are considering one lump-sum payment today . To achieve your objective of $150,000 at the end of the twenty-year period, what should this sum be?
b. You can also decide for annual payments. Your first payment is to be made at the end of the first year and the final payment is to be made at the end of the 20th year. What amount must you plan to pay annually to achieve your objective?
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