(Complex

present

value)

You would like to have

$54,000

in

12

years. To accumulate this amount, you plan to deposit each year an equal sum in the bank, which will earn

8

percent interest compounded annually. Your first payment will be made at the end of the year.

a. How much must you deposit annually to accumulate this amount?

b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn

8

percent on this deposit.)

c. At the end of

5

years you will receive

$8,000

and deposit this in the bank toward your goal of

$54,000

at the end of

12

years. In addition to this deposit, how much must you deposit in equal annual deposits to reach your goal? (Again assume you can earn

8

percent on this deposit.)

Question content area bottom

Part 1

a. How much must you deposit annually to accumulate

$54,000

in

12

years?

(Round to the nearest cent.)

Part 2

b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn

8

percent on this deposit.)

(Round to the nearest cent.)

Part 3

c. At the end of

5

years you will receive

$8,000

and deposit this in the bank toward your goal of

$54,000

at the end of

12

years. In addition to this deposit, how much must you deposit in equal annual deposits to reach your goal? (Again assume you can earn

8

percent on this deposit.)

$enter your response here

(Round to the nearest cent.)