Twelve years ago, you deposited $25,500 into an investment fund. Five years ago, you added an additional $15,000 to that account. You earned 9%, compounded semi-annually, for the first 12 years, and 7.5%, compounded annually, for the last five years. Required: a. What is the effective annual interest rate (EAR) you would get for your investment in the first 12 years? b. How much money do you have in your account today? c. If you wish to have $75 000 now, how much should you have invested 17 years ago?
Twelve years ago, you deposited $25,500 into an investment fund. Five years ago, you added an additional $15,000 to that account. You earned 9%, compounded semi-annually, for the first 12 years, and 7.5%, compounded annually, for the last five years. Required: a. What is the effective annual interest rate (EAR) you would get for your investment in the first 12 years? b. How much money do you have in your account today? c. If you wish to have $75 000 now, how much should you have invested 17 years ago?
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 34P
Related questions
Question
Twelve years ago, you deposited $25,500 into an investment fund.
Five years ago, you added an additional $15,000 to that account. You earned 9%,
compounded semi-annually, for the first 12 years, and 7.5%, compounded
annually, for the last five years. Required:
a. What is the effective annual interest rate (EAR) you would get for your
investment in the first 12 years?
b. How much money do you have in your account today?
c. If you wish to have $75 000 now, how much should you have invested 17 years
ago?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning