Make any other deposits after initial deposit

Assignment Help Financial Management

Reference no: EM131983080

You want to set up an account that will pay you $A in constant (year-0) dollars in each year from the end of year 1 through the end of year 8 (a total of 8 payments). The inflation rate is 4.05% and you wish to receive $141 in actual (year-8) dollars from the account at the end of year 8. If the market interest rate for the account is 6.1% compounded annually, how much to the nearest dollar do you need to deposit now to meet your wishes? You will not make any other deposits after the initial deposit. (HINT : you will need to calculate the inflation-free interest rate to relate $A to the initial deposit.)

Reference no: EM131983080

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