Question

What lump sum deposited today at 8​% compounded quarterly for 15 years years will yield the same final amount as deposits of ​$5000 at the end of each​ 6-month period for 15 years at 10​% compounded​ semiannually?

The value of the lump sum is ?? ​$

Answer 1

rate positively ..

	First we have to compute the future value of deposits of ​$5000 at the end of each​ 6-month period for 15 years at 10​% compounded​ semiannually
	Put in calculator -
	PV		0
	PMT		-5000
	I	10%/2	5%
	N	15*2	30
	Compute FV		$332,194.24
	Now we can compute the lumpsum payment required
	Put in calculator -
	FV		$332,194.24
	PMT		0
	I	8%/4	2.00%
	N	15*4	60
	compute PV		($101,246.91)
	Therefore answer =		$101,246.91