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In: Economics

A company wishes to deposit $5000 in the bank today and to make ten additional deposits...

A company wishes to deposit $5000 in the bank today and to make ten additional deposits every six months beginning six months from now, the first of which will be $5000 and increasing $1000 per deposit after that. Immediately after making the last deposit, the company decides to withdraw all the money deposited. If the bank pays 12% nominal interest compounded semi-annually, how much money will the company receive?

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Expert Solution

The solution, formula and reasoning are provided in the following attached image files :

In this method, we have secluded each principal amount and compounded them separately for the terms left after their deposit. The total terms is 10 with the first deposit of $5,000 coming at term 0.

Rahul Sunny answered 2 years ago
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