You would like to have ​$53,000 in 13 years. To accumulate this​ amount, you plan to deposit an equal sum in the bank each year that will earn 6 percent interest compounded annually. Your first payment will be made at the end of the year.   a.  How much must you deposit annually to accumulate this​ amount? b.  If you decide to make a large​ lump-sum deposit today instead of the annual​ deposits, how large should this​ lump-sum deposit​ be? ​ (Assume you can earn 6 percent on this​ deposit.) c.  At the end of five​ years, you will receive ​$20,000 and deposit this in the bank toward your goal of ​$53,000 at the end of year 13. In addition to the​ lump-sum deposit, how much must you deposit in equal annual​ amounts, beginning in year 1 to reach your​ goal? ​ (Again, assume you can earn 6 percent on your​ deposits.)

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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  You would like to have
​$53,000
in
13
years. To accumulate this​ amount, you plan to deposit an equal sum in the bank each year that will earn
6
percent interest compounded annually. Your first payment will be made at the end of the year.
 
a.  How much must you deposit annually to accumulate this​ amount?
b.  If you decide to make a large​ lump-sum deposit today instead of the annual​ deposits, how large should this​ lump-sum deposit​ be? ​ (Assume you can earn
6
percent on this​ deposit.)
c.  At the end of five​ years, you will receive
​$20,000
and deposit this in the bank toward your goal of
​$53,000
at the end of year
13.
In addition to the​ lump-sum deposit, how much must you deposit in equal annual​ amounts, beginning in year 1 to reach your​ goal? ​ (Again, assume you can earn
6
percent on your​ deposits.)
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