Barbara wants to accumulate $10000 by the end of 10 years. She starts making quarterly deposits in her investment account, which pays J4=8%. A) Determine the size of quarterly payments. B) After 4 years, the rate of return changes to J4=6%. Determine the size of the quarterly deposits now required if the $10000 goal is to be met.

Barbara wants to accumulate $10000 by the end of 10 years. She starts making quarterly deposits in her investment account, which pays J4=8%. A) Determine the size of quarterly payments. B) After 4 years, the rate of return changes to J4=6%. Determine the size of the quarterly deposits now required if the $10000 goal is to be met.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...

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Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
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