How much would you have in your account

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Question -

1. Suppose that today you deposited $1,000 into a savings account that pays 8 percent.

a. If the bank compounds interest annually, how much will you have in your account three years from today?

b. What would your balance be in three years if the bank used quarterly compounding rather than annual compounding?

c. What is the effective annual rate in part b?

d. Suppose you deposited the $1,000 in four payments of $250 each year for four years, beginning at the end of year 1. How much would you have in your account in four years when the last deposit is made assuming that interest is 8 percent compounded annually?

e. Suppose you deposited four equal payments in your account beginning at the end of year 1. Assuming an 8 percent interest rate, how large would each of your payments have to be for you to obtain the same ending balance as you calculated in part a?

Reference no: EM132822982

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