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Suppose you deposit $1000 into a savings account that pays 8 percent.

a. If the bank compounds interest annually, how much will you have in your account in 4 years?

b. What would your balance be in 4 years if the bank used quarterly compounding rather than annual compounding?

c. Suppose you deposited the $1000 in four payments of $250 each year beginning one year from now. How much would you have in your account after you make the final deposit, based on 8 percent annual compounding?

d. Suppose you deposited four equal payments in your account beginning one year from today. If you can invest your money at an 8 percent interest rate, how large would each of your payments have to be for you to obtain the same ending balance as you calculated in part (a)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91671348

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