Question: Investor A just turned 20 years old and currently has
Investor A just turned 20 years old and currently has no investments. She plans to invest $5,500 at the end of each year for eight years, beginning in five years. The rate of return on her investment is 15 percent, continuously compounded. Investor B is 40 years old and he has just started to invest an equal amount of money at the beginning of every year. He will invest for 10 years. The rate of return on his investment is 16 percent, compounded quarterly. Determine the yearly payment Investor B has to make in order to have the same present value as Investor A.
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