Hamilton wants to accumulate ₺ 24.000 at the end of 4 years. It starts quarterly payments in a bank account which pays J4= 6% (annual interest rate with quarterly compounding). a) Find the size of quarterly payments ? b) If, after 2 years, bank switches the rate to J4= 8%, what would be the size of quarterly payments for last 2 years required to meet the ₺15.000 goal?

Hamilton wants to accumulate ₺ 24.000 at the end of 4 years. It starts quarterly payments in a bank account which pays J4= 6% (annual interest rate with quarterly compounding). a) Find the size of quarterly payments ? b) If, after 2 years, bank switches the rate to J4= 8%, what would be the size of quarterly payments for last 2 years required to meet the ₺15.000 goal?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 34P: You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make...

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You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, with the first occurring today. The bank pays 8% interest, compounded annually. You expect to receive annual raises of 3%, which will offset inflation, and you will let the amount you deposit each year also grow by 3% (i.e., your second deposit will be 3% greater than your first, the third will be 3% greater than the second, etc.). How much must your first deposit be if you are to meet your goal?
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