Find the amount of the level deposit made at the start of each week for 10...

Find the amount of the level deposit made at the start of each week for 10 years at a nominal annual rate of 5.2% compounded weekly that will permit payment of 10,000 at the start of each year perpetually starting at the beginning of the 11th year. Assume that a year is exactly 52 weeks.

Solutions

Expert Solution

The payment of 10,000 each year from beginning of 11 th year is to be made for infinite period.

So, the Present value of this Perpetuity is computed as,

So, the Future value of weekly deposits compuned at 5.2% is 192,307.69

Now,

Here,

FV = Future value at the end = 192,307.69

P = Periodic payment (UNKNOWN)

i = Interest rate per period 0.1% or

n = Number of compounding periods = 10year * 52 weeks = 520

The deposit needed weekly shall be $282.15

jeff jeffy answered 2 years ago

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