5 53 Modified see template for modifications to the problem You would like to have 500 000 in 20 years To accumulate this amount

Question

5 53 Modified see template for modifications to the problem You would like to have 500 000 in 20 years To accumulate this amount you plan to deposit an equal sum in the bank each year that will earn 7 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 be Assume you can eam 7 on the deposit A B 4 c At the end of 10 years you will receive 100 000 and deposit this in the bank toward your goal of 500 000 at the end of 20 years In addition to this deposit how much must you deposit in equal annual deposits to reach your goal at 7 PV 1 nper pmt FV PV T nper pmt FV C Step 1 PV i nper pmt FV Step 2 PV i nper pmt FV 7 20 12 196 46 500 000 00 129 209 50 7 20 0 00 500 000 00 Hint first in Step 1 determine how much 100K will be worth at the end of 20 years 100 000 00 7 10 196 715 14 500 000 Hint in Step 2 for the FV figure use 500 000 minus the amount from Step 1 Instructions Questions P6 53M P6 54M P6 24M

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