Eleanor makes year-end deposits of P5000 the first year, P5500 the second year, P6050 the third year, and so on, increasing the next year's deposit by 10% of the deposit in the preceding year until the end of the tenth year. Ronald deposits Php9,100 during the first year, Php 8,600 in the second year, and amounts decreasing by Php 500 every year. If interest on both funds is 12% compounded annually, who will be able to save more at the end of the 10 years? Draw the cash flow diagram for both situations.
Eleanor makes year-end deposits of P5000 the first year, P5500 the second year, P6050 the third year, and so on, increasing the next year's deposit by 10% of the deposit in the preceding year until the end of the tenth year. Ronald deposits Php9,100 during the first year, Php 8,600 in the second year, and amounts decreasing by Php 500 every year. If interest on both funds is 12% compounded annually, who will be able to save more at the end of the 10 years? Draw the cash flow diagram for both situations.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Eleanor makes year-end deposits of P5000 the first year, P5500 the second year, P6050 the third
year, and so on, increasing the next year's deposit by 10% of the deposit in the preceding year
until the end of the tenth year. Ronald deposits Php9,100 during the first year, Php 8,600 in the
second year, and amounts decreasing by Php 500 every year. If interest on both funds is 12%
compounded annually, who will be able to save more at the end of the 10 years? Draw the cash
flow diagram for both situations.
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