To save money for a new house, you want to begin contributing money to a brokerage account. Your plan is to make ten contributions to the brokerage account. Each contribution will be for $2,500. The contributions will come at the beginning of each of the next 10 years, i.e., the first contribution will be made today at t = 0 and the final contribution will be made at t = 9. Assume that the brokerage account pays a 9 percent return with semi-annual compounding. How much money do you expect to have in the brokerage account nine years from now (t = 9)?
To save money for a new house, you want to begin contributing money to a brokerage account. Your plan is to make ten contributions to the brokerage account. Each contribution will be for $2,500. The contributions will come at the beginning of each of the next 10 years, i.e., the first contribution will be made today at t = 0 and the final contribution will be made at t = 9. Assume that the brokerage account pays a 9 percent return with semi-annual compounding. How much money do you expect to have in the brokerage account nine years from now (t = 9)?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 23P
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To save money for a new house, you want to begin contributing money to a brokerage account. Your plan is to make ten contributions to the brokerage account. Each contribution will be for $2,500. The contributions will come at the beginning of each of the next 10 years, i.e., the first contribution will be made today at t = 0 and the final contribution will be made at t = 9. Assume that the brokerage account pays a 9 percent return with semi-annual compounding. How much money do you expect to have in the brokerage account nine years from now (t = 9)?
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