You would like to have $57,000 in 14 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 6 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 6 percent on this deposit.) c. At the end of five years, you will receive $15,000 and deposit this in the bank toward your goal of $57,000 at the end of year 14. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 6 percent on your deposits.) Question content area bottom Part 1 a. How much must you deposit annually to accumulate this amount? $enter your response here (Round to the nearest cent.) Part 2 b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be? $enter your response here (Round to the nearest cent.) Part 3 c. If you deposit $15,000 received at the end of five years in the bank, what will the amount grow to by the end of year 14? $enter your response here (Round to the nearest cent.) Part 4 In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? $enter your response here (Round to the nearest cent.)

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.15E

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Question content area top

Part 1

(Comprehensive problem) You would like to have

$57,000

years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn

percent interest compounded annually. Your first payment will be made at the end of the year.

a. How much must you deposit annually to accumulate this amount?

b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn

percent on this deposit.)

c. At the end of five years, you will receive

$15,000

and deposit this in the bank toward your goal of

$57,000

at the end of year

14.

In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn

percent on your deposits.)

Question content area bottom

Part 1

a. How much must you deposit annually to accumulate this amount?

$enter your response here

(Round to the nearest cent.)

Part 2

b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be?

$enter your response here

(Round to the nearest cent.)

Part 3

c. If you deposit

$15,000

received at the end of five years in the bank, what will the amount grow to by the end of year

14?

$enter your response here

(Round to the nearest cent.)

Part 4

In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal?

$enter your response here

(Round to the nearest cent.)

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