Question

1. Derek currently has $12,393.00 in an account that pays 6.00%. He will withdraw $5,548.00 every other year beginning next year until he has taken 5.00 withdrawals. He will deposit $12393.0 every other year beginning two years from today until he has made 5.0 deposits. How much will be in the account 26.00 years from today?

2. Derek can deposit $258.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 13.00% and compounds interest monthly. Derek can deposit $2,478.00 per year for the next 10 years into an account at Bank B. The first deposit will be made next year. Bank B compounds interest annually. What rate must Bank B pay for Derek to have the same amount in both accounts after 10 years?

3. Assume the real rate of interest is 2.00% and the inflation rate is 5.00%. What is the value today of receiving 14,570.00 in 14.00 years?

Answer 1

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