It is now January 1. You plan to make a total of 5 deposits of $300 each, one ev

ID: 2659202 • Letter: I

Question

It is now January 1. You plan to make a total of 5 deposits of $300 each, one every 6 months, with the first payment being made today. The bank                             pays a nominal interest rate of 8% but uses semiannual compounding. You plan to leave the money in the bank for 5 years. How much will be in your                             account after 5 years? Round your answer to the nearest cent.
                                $
You must make a payment of $1,776.63 in 10 years. To get the money for this payment, you will make 5 equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 14% with quarterly compounding. How large must each of the 5 payments be? Round your answer to the nearest cent.
$

PMT = 300 , nper = 5, Interest Rate = 8% p.a = 4% per semi annual

Amount after 2 year = fv(rate,nper,pmt,pv,type)

Amount after 2 year = fv(4%,5,300,0,1)

Amount after 2 year = $1689.89

How much will be in your account after 5 years?

Amount after 5 year = $1689.89*1.04^6

Amount after 5 year in the account = $ 2138.25

Amount at end of 10 year (Fv) = 1776.63 , Quarterly Interest rate = 3.5%

Amount at the end of 1st year = 1776.63/(1.035^36) = $ 514.926

How large must each of the 5 payments be?

Deposit amount = pmt(rate,nper,pv,fv,type)

Deposit Amount = pmt(3.5%,5,0,514.926,0)

Deposit Amount = $ 96

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