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Q. It is now January 1, 2012. Today you will deposit $1,000 into a savings account that pays 8%.

(a) If the bank compounds interest yearly, explain how much will you have in your account on January 1, 2015?

(b) What will your 1st January 2015, balance if bank uses quarterly compounding?

(c) Suppose you deposit $1,000 in three payments of $333.333 each on January 1, of 2013, 2014, and 2015. How much will you have in your account on January 1, 2015, based on 8% annual compounding?

(d) How much will be in your account if the three payments begin on January 1, 2012?

(e) Suppose you deposit three equal payments into your account on January 1 of 2013, 2014 and 2015. Assuming an 8% interest rate, how large must your payments be to have the same ending balance as in Part a?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9723718

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