Calculate the effective interest to compound quarterly

Reference no: EM13202475

What sum should you deposit into an account to yield 20 year end payments, starting with $10,000 at the end of the first year and increasing by 4% each year at an interest rate of 8% compounded quarterly?

you have to calculate the effective interest = [(1 +i)/4]$ = [(1.08)/4]^4 for the compounded quarterly, but this comes out to a negative number. ? Whatever the interest should come out to I believe you plug it into 1+g'=(1+ieff)/(1+g). Then plug g' into the equation for P should yield the final result asked in the question.

Reference no: EM13202475

Questions Cloud

Process of the log-linear method of regression : A discussion which explains the process of the log-linear method of regression to determine the dividend growth rate.

When the same efforts must be made to uncork and pour bottle : Most restaurant customers tip according to a percentage rule - between 15 and 25 percent of the bill. Diners who have dinner and a $20 bottle of wine usually pay the same percentage of the bottle price as diners who order a $100 bottle.

Do the opportunity costs of borrowing and using own funds : Lenders perceive that you are risky, so you must pay 12 percent annual interest to borrow from one of them. You only receive 6 percent on funds that you have deposited in the bank. Do the opportunity costs of borrowing and using your own funds dif..

Explain why some countries experienced growth : Read "A Possible Perspective on Growth and Stagnation Over the Past 200 Years" posted on Blackboard. a. Describe the 4 reasons that Acemoglu gives for why the world did not experience growth before 1800. Name the 3 structural transformations underwen..

Calculate the effective interest to compound quarterly : What sum should you deposit into an account to yield 20 year end payments, starting with $10,000 at the end of the first year and increasing by 4% each year at an interest rate of 8% compounded quarterly.

Calculate the amount of the monthly deposit sarah must make : Sarah will use the rest of the proceeds of her retirement savings fund to set up a fund from which she plans to bequeath $500,000 to her grand- children on her 80th birthday. Her bequest fund will pay interest of 41 2 percent compounded annually.

Calculate the size of the endowment : junstin.Ting Corporation wants to establish a scholarship in the company's name at a university. The firm wants the scholarship to provide a quarterly award of $4500. The university's scholarship foundation will invest the endowment in a fund that..

Calculate the amount of johns payment : Calculate the amount of John's payment over the life of his loan and compare these findings if he would have taken out a fix rate loan for the same period at 6.5%. Which do you think is the better deal?

Find the value today of the maintenance costs : The operations manager of Black Cat Blades Ltd. of Edmonton, Alberta, is examining the cost of maintaining the company's manufacturing facility. Maintenance occurs every month. The cost of maintenance starts at $2250 and it will grow by $20 each t..

User Account

All Pages