Question
In: Economics
At 6% effective annual interest, approximately how much will be accumulated in ten years if three...
At 6% effective annual interest, approximately how much will be accumulated in ten years if three payments of $100 are deposited every other year for four years, with the first payment occurring at t = 0?
. (A) $180
. (B) $480
. (C) $510
. (D) $540
Solutions
Expert Solution
Ans: $480
Explanation:
Present value = 100 + 100(P/F, 6%, 2) + + 100(P/F, 6%, 4)
= 100 + 100(0.8900) + 100(0.7921)
= 100 + 89 + 79.21
= 268.21
Future value = PV(F/P, i, n)
= 268.21(F/P, 6%, 10)
= 268.21(1.791)
= $480
Thus, option [B] is correct answer.
Rahul Sunny answered 2 years agoRelated Solutions
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