P1
Deposits to accumulate future sums. For each of the cases shown in the following table, determine the amount of equal, annual, end of year deposits necessary to accumulate the given sum at the end of specified period, assuming stated annual interest rate.
Case Sum to be Accumulation
Accumulated period (years) Interest Rate
A $5000 3 12%
B 100,000 20 7
C 30,000 8 10
D 15,000 12 8

P 2
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, end-of-year deposits into an account paying 8% annual interest.
a. How large must the annual deposits be to create $220,000 fund by the end of 42 years?
b. If you can afford to deposit $600 per year into the account, how much will you have accumulated by the end of forty-second year?

Problem 1
Case A
Sum to be accumulated=S=$5000
Number of periods=n=3
Interest rate=i=12%
Periodic payment=R=?

We know that sum of ordinary annuity is given by
S=R/i*((1+i)^n-1)
5000=R/12%*((1+12%)^3-1)
5000=R/12%*(0.404928)
5000=3.3744R
R=5000/3.3744=$1481.75

Case B
Sum to be accumulated=S=$100000
Number of periods=n=20
Interest rate=i=7%
Periodic payment=R=?

We know that ...

Solution Summary

There are two problems. Solutions to these problems depict the steps to calculate equal, annual, year end deposits sufficient enough to meet the given target.

You want to have $30,000 in your savings account eight years from now, and you're prepared to make equal annualdeposits into the account at the end of each year. If theamount pays 5.25 percent interest, what amount must you deposit each year?

Suppose you wish to set aside $2,000 at the end of each of the next 10 years in an account paying 12% compounded annually. You accumulate at the end of 10 years an amount closest to what? Also, please provide formula.

A company issued $1,000,000, 10-year bonds and agreed to make annual sinking fund deposits of $80,000. Thedeposits are made at the end of each year into an account paying 5% annual interest. What amount will be in the sinking fund at the end of 10 years?

Gordon Company issued $1,000,000, 10-year bonds and agreed to make annual sinking fund deposits of $80,000. Thedeposits are made at the end of each year into an account paying 5% annual interest. What amount will be in the sinking fund at the end of 10 years?

A friend is celebrating his 35th birthday today and wants to start saving for his retirement at age 65. He wants to be able to withdraw $10,000 from his savings account on each birthday for 10 years following his retirement; the first withdrawal will be on his 66th birthday. He wants to invest his money in the local savings bank

Gordon Company issued $1,000,000, 10 year bonds and agreed to make annual sinking fund deposits of $80,000. Thedeposits are made at the end of each year into an account paying 5% annual interest. What amount will be in the sinking fund at the end of 10 years?
How do I set this up to calculate?

Given a central bank has gold, foreign exchange, banks' deposits, gov't securities and currency in circulation and the banks had checkable deposits, savings deposits/time deposits, and currency inside the banks which of the above who I use to calculate
a Banks' reserves
The Monetary Base
M2

Assume that Interest Rate Parity holds. The spot rate for the Euro is $1.20 and the one year forward rate is $1.23. Theannual rate of interest in Germany on annualdeposits is 2.439%. What is theannual rate of interest on deposits in the United States?

Astros Co wants to accumulate $2,000,000 by 10/1/10. To achieve this goal, Astros Co will make the first of 6 equal annualdeposits on 10/1/05. Thedeposits will be placed into a fund that earns interest at 10%
**Compute the:
1) amount of the equal annual deposit
2) balance of the account at 10/1/08, immediately after

You are saving for retirement. To live comfortably, you decide you will need to save $2 million by the time you are 65. Today is your 30th birthday, and you decide, starting today and continuing on every birthday up to and including you 65th birthday, that you will put the same amount into a savings account. if the interest rate