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
1. A fund is built with annual deposits increasing by 1 from 1 to 10 and...
1. 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 5%. At the end of 19 years, the fund is used to
purchase a 8-year annuity with level payment $X at an annual
effective interest rate of 3% with the first payment 20 years from
today.
Calculate X
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The godparents of Nathan James decide to make annual deposits into an insurance fund to finance...
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