Question
In: Finance
A fund is built with annual deposits increasing by 1 from 1 to 10 and then...
A fund is built with annual deposits increasing by 1 from 1 to 10 and then decreasing
by 1 to $0 at an annual effective interest rate of 6%. At the end of 29 yrs, the fund is
used to purchase a 9 yr annuity with level payment $Y at an annual effective interest
rate of 4% with first payment 30 yrs from today. Calculate Y.
Solutions
Expert Solution
The crux of the question is to realised that the deposit of year
one of $1 will remain deposited for 29 years, deposit of $2 in year
2 will remain deposited for 28 years and so on. Then calculate the
future value at the end of 29 years based on which the anuuity
would be calculated.
jeff jeffy answered 1 year agoRelated Solutions
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