•A intends to invest a level amount of money equal to
$1,000 into a fund at the end of every year for 20 years. This fund
is projected to earn an annual effective interest rate of 10%. At
the end every year, A will have to withdraw the interest accrued
during that year and reinvest it at an annual effective rate of
6%.
•Assume that A wants the annual yield rate of the above investment
scheme to be 8% over the 20−year life of the investment.
•How much should A charge B today for the right to the above
investment in order to get the yield A wants?
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•A intends to invest a level amount of money equal to $1,000 into a fund at...
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