You are considering two return-guaranteed investment plans from SBB bank. Both investment plans would allow you...
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You are considering two return-guaranteed investment plans from SBB bank. Both investment plans would allow you to accumulate $4 million eight years from now and both investment plans require making period-end deposits. Plan 1: Quarterly deposit earning 18% compounded quarterly Plan 2: Monthly deposit earning 2% monthly rate AND a single deposit of $250,000 today The first periodic deposit under both plans is to be made at the end of the current period while the last payment is to be made eight years from today. (a) What should be the size of the periodic deposit be if Plan 1 is to achieve the target amount of $4 million? (5 marks) (b) What should be the size of the periodic deposit be if Plan 2 is to achieve the target amount of $4 million? (4 marks) You are considering two return-guaranteed investment plans from SBB bank. Both investment plans would allow you to accumulate $4 million eight years from now and both investment plans require making period-end deposits. Plan 1: Quarterly deposit earning 18% compounded quarterly Plan 2: Monthly deposit earning 2% monthly rate AND a single deposit of $250,000 today The first periodic deposit under both plans is to be made at the end of the current period while the last payment is to be made eight years from today. (a) What should be the size of the periodic deposit be if Plan 1 is to achieve the target amount of $4 million? (5 marks) (b) What should be the size of the periodic deposit be if Plan 2 is to achieve the target amount of $4 million? (4 marks)
Expert Answer:
Answer rating: 100% (QA)
a The size of the periodic deposit for Plan 1 should be 91667 To calculate the size of the periodic ... View the full answer
Related Book For
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073212227
8th Edition
Authors: Ferdinand Beer, E. Russell Johnston, Jr., Elliot Eisenberg, William Clausen, David Mazurek, Phillip Cornwell
Posted Date:
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