How large should the lump-sum deposit be

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Reference no: EM132016076

You would like to have BD75,000 in fifteen years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 4 percent 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 the lump-sum deposit be? (Assume you can earn 4% compounded quarterly on this deposit.)

C) At the end of five years, you will receive BD20,000 and deposit it in the in an effort to reach your goal of BD75,000 at the end of 15 years. In addition to the deposit, how much must you deposit in equal annual deposits to reach your goal? (Assume you can earn 4% interest compounded anually.)

Reference no: EM132016076

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