Homework Answers
Answer a)
Answer b)
Amount of money to be deposited every quarter is $1575.
Calculations:
$50,000×PVIF, 8%, 6 years= 50,000× 0.630= $31508.
Here 8% is given annual interest rate and 6 years is the period starting from beginning of 5th year till the end of 10th year.
$31508/FVIFA, 2%,17 =31508/20.012=$1575(approx.)
Here rate of interest is adjusted for quarterly deposits to 2%,i.e.8%/4 and period is taken as 17 from beginning of quarter 1 till the end of quarter 16 or beginning of 5th year.
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