You decide to provide yourself with a retirement account by depositing X into an account at the beginning of every 2 years for the next 40 years. Two year after your final deposit, you want to purchase, with your accumulated funds, a 25-year annuity- immediate that pays $25,000 every six months. Assume that the effective annual rate of interest is 7% for the first 40 years, and 5% thereafter. Find X, the amount of your annual deposit necessary to achieve your retirement annuity purchase. a) compute the both annuities with interest conversion method b) compute the both annuities with fission method. c) compute both annuities with the general formula d) compute the PV of the 25 year annuity at time 0.

You decide to provide yourself with a retirement account by depositing X into an account at the beginning of every 2 years for the next 40 years. Two year after your final deposit, you want to purchase, with your accumulated funds, a 25-year annuity- immediate that pays $25,000 every six months. Assume that the effective annual rate of interest is 7% for the first 40 years, and 5% thereafter. Find X, the amount of your annual deposit necessary to achieve your retirement annuity purchase. a) compute the both annuities with interest conversion method b) compute the both annuities with fission method. c) compute both annuities with the general formula d) compute the PV of the 25 year annuity at time 0.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 23P

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