Mrs. Williams finds that she has two options for investing $31,000.03 for fifteen years. The first...

 

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Mrs. Williams finds that she has two options for investing $31,000.03 for fifteen years. The first option is to deposit the $31,000.03 into a fund earning a nominal rate of discount d(4) payable quarterly. The second option is to purchase an annuity-immediate with 15 level annual payments, the annuity payments computed using an annual effective rate of 6%, and then when she gets an annuity payment, to immediately invest it into a fund earning an annual effective rate of 4%. Mrs. Williams calculates that the second option produces an accumulated value that is $1,500 more than the accumulated value yielded by the first option. Calculate d(4). (Round your answer to two decimal places.) Mrs. Williams finds that she has two options for investing $31,000.03 for fifteen years. The first option is to deposit the $31,000.03 into a fund earning a nominal rate of discount d(4) payable quarterly. The second option is to purchase an annuity-immediate with 15 level annual payments, the annuity payments computed using an annual effective rate of 6%, and then when she gets an annuity payment, to immediately invest it into a fund earning an annual effective rate of 4%. Mrs. Williams calculates that the second option produces an accumulated value that is $1,500 more than the accumulated value yielded by the first option. Calculate d(4). (Round your answer to two decimal places.)

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To solve this problem we can set up the equation for the accumulated value of the first and second o... View the full answer