Business

FinanceQ&A LibraryYou would like to have $72,000 available in 15 years. There are two options. Account A has a rate of 8.58.5% compounded once a year. Account B has a rate of 88% compounded daily. How much would you have to deposit in each account to reach your goal? Assume 360 days in a year. You must invest $ in Account A.Question

Asked Oct 20, 2019

20 views

You would like to have $72,000 available in 15 years. There are two options. Account A has a rate of 8.58.5% compounded once a year. Account B has a rate of 88% compounded daily. How much would you have to deposit in each account to reach your goal? Assume 360 days in a year.

You must invest $ in Account A.

Step 1

Let A and B be the amount to be deposited in Account A and Account B respectively to get the desired maturity value of $ 72,000.

n = number of year = 15

m = frequency of compounding in a year

For Account A, m = 1

For account B, m = 360

Step 2

If P is the amount deposited in an account with annual interest rate r compounded m times a year, for n year, then future value FV is given by,

FV = P x (1 + r / m)n x m

For Account A, this equation will result ...

Find answers to questions asked by student like you

Show more Q&A

Q: Suppose Omni Consumer Products's CFO is evaluating a project with the following cash inflows. She do...

A: Part 1:Payback Period = 2.5 yearsCalculation of Initial Investment:

Q: Ten years ago the Templeton Company issued 30-year bonds with a 10% annual coupon rate at their $1,0...

A: We will make use of the RATE function in excel to calculate the yield to call. This yield to call is...

Q: The next dividend payment by Savitz, Inc., will be $1.80 per share. The dividends are anticipated to...

A: Required Return: A required rate of return is a least amount of return an investor is anticipating t...

Q: Calculate how much you will have to save each month between now and then to have $300,000 in your re...

A: Calculate the monthly saved amount as follows:

Q: A firm with a 14% WACC is evaluating two projects for this year’s capital budget. After-tax cash flo...

A: 1. For project A, Net Present Value (NPV) is calculated by reducing the initial investments of year ...

Q: Use an amortization table to solve the problem. Round to the nearest cent. A 7000 debt is to be amor...

A: Installment amount paid each month is the sum of principal amount and interest. Closing balance is t...

Q: In order to solve this question, would I use the compounded monthly formula and then subtract the ba...

A: We will do it in following steps:First we will find out what should be the monthly mortgage payment ...

Q: Construct the amortization schedule for a $14,000.00 debt that is to be amortized in 10 equal semian...

A: Calculation of Amortization Schedule:The amortization schedule for 10 equal payments are calculated....

Q: You are scheduled to receive $15,000 in two years. When you receive it, you will invest it for six m...

A: Given,Money Received after 2 years and Present Value of the investment for 6 years (PV) = $15,000Tim...