A firm is required to make a payment at the end of each year for 9 consecutive years. The annual payment will be $1000 for the first 5 years and $1600 for the remaining 4 years. These payments will be made by withdrawing money from a 4 percent reserve fund. What sum must be deposited in the fund 1 years prior to the first payment if the last withdrawal is to close the fund?

A firm is required to make a payment at the end of each year for 9 consecutive years. The annual payment will be $1000 for the first 5 years and $1600 for the remaining 4 years. These payments will be made by withdrawing money from a 4 percent reserve fund. What sum must be deposited in the fund 1 years prior to the first payment if the last withdrawal is to close the fund?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

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