Suppose that a savings account attracts an interest rate of 1.6% per annum. How much would need to be deposited into the account now in order to have $5,000 in 8 years if the interest is compounded: (a) Quarterly? (4 times per year) (b) Continuously? Give your answers rounded to two decimal places.

Suppose that a savings account attracts an interest rate of 1.6% per annum. How much would need to be deposited into the account now in order to have $5,000 in 8 years if the interest is compounded: (a) Quarterly? (4 times per year) (b) Continuously? Give your answers rounded to two decimal places.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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Suppose that a savings account attracts an interest rate of 1.6% per
annum. How much would need to be deposited into the account now
in order to have $5,000 in 8 years if the interest is compounded:
(a) Quarterly? (4 times per year)
(b) Continuously?
Give your answers rounded to two decimal places.

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