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(2) $150 is deposited semiannually and the credit union pays interest
(3) $75 is deposited quarterly and the credit union pays interest
b. Use your finding in part a to discuss the effect of more frequent deposits and
compounding of interest on the future value of an annuity. 4–38 Deposits to accumulate future sums For each of the cases shown in the following table, determine the amount of the equal annual end-of-year deposits necessary to accumulate the given sum at the end of the specified period, assuming the
stated annual interest rate. Case Sum to be
period (years) Interest rate A
B $ 5,000 3 12% 100,000 20 7 C 30,000 8 10 D 15,000 12 8 LG6 Creating a retirement fund To supplement your planned retirement in exactly
42 years, you estimate that you need to accumulate $220,000 by the end of
42 years from today. You plan to make equal annual end-of-year deposits into
an account paying 8% annual interest.
a. How large must the annual deposits be to create the $220,000 fund by the
end of 42 year...
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