The interest rates given in the assignment are annual percentage rates. 1. Assume that starting on...

The interest rates given in the assignment are annual percentage rates.

1. Assume that starting on December 31, 2020, you deposit $2,800 in the bank and that you continue to deposit $2,800 every December 31st through December 31, 2050 (a total of 30 deposits). You are able to earn 4% interest per year. How much money will you have saved by December 31, 2050 after making the final deposit? (Hint: I recommend that you use the FV formula in Excel to solve this payment in arrears [sometimes called an ordinary annuity] problem. You can access the Help menu to learn how to use the FV function.)

2. Use the information from Question 1 except assume that you are able to earn 6% interest per year. How much money will you have saved by December 31, 2050?

3. Use the information from Question 1 except assume that you save every year through

December 31, 2060. How much money will you have saved by December 31, 2060?

Solutions

Expert Solution

Ans:

Please find attached answer sheets. 1 sheet contains answer and other contains formula. Assuming deposit started on 31st Dec 2020, beginning of the year.

For any query please ask in comment box. Please don't forget to provide your valuable feedback. Thanks!

ekkarill92 answered 1 year ago

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