Miranda wants to give her daughter $10 000 in 10 yrs time. In option 1: she...

Miranda wants to give her daughter $10 000 in 10 yrs time.

In option 1: she can make 10 equal payments at 6% per annum compounded yearly

In option 2: miranda can invest a lump sum now at 6% per annum compounded monthly.

Q- Determine the annual deposit under option 1 and how much does the lump sum need to be under option 2?

Expert Solution

Option 1:

Answer: Option 1: $758.68.

-----------------------------------

Option 2:

Answer: Option 2: $5,496.33

jeff jeffy answered 2 years ago

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