Suppose that ​$ 2,500 is set aside each year and invested in a savings account that pays ​8% interest per​ year, compounded continuously. a. Determine the accumulated savings in this account at the end of 25 years. b. In Part​ (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 25 The annuity will extend from the EOY 26 to the EOY 34  What is the value of this annuity if the interest rate and compounding frequency in Part​ (a) do not​ change?

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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Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that
​$ 2,500 is set aside each year and invested in a savings account that pays ​8% interest per​ year, compounded continuously.
a. Determine the accumulated savings in this account at the end of 25 years.
b. In Part​ (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 25 The annuity will extend from the EOY 26 to the EOY 34  What is the value of this annuity if the interest rate and compounding
frequency in Part​ (a) do not​ change?
 
Click the icon to view the interest annuity table for continuous compounding when i=8% per year 
 
 

 

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