Assume that 1 year from now you plan to deposit Rs. 1,000 into a savings account that pays a nominal rate of 8 percent. a. If the bank compounds…
BBS Fundamentals of Financial Management · 2079 · Solved Question with Answer
Assume that 1 year from now you plan to deposit Rs. 1,000 into a savings account that pays a nominal rate of 8 percent.
b. What would your balance be 4 years from now. If the bank used quarterly compounding rather than annual compounding?
c. Suppose you deposited the Rs. 1,000 in 4 payments of Rs. 250 each at the end of Years 1, 2, 3, and 4. How much would you have in your account at end of year 4, based on 8 percent annual compounding?
d. Suppose you deposited 4 equal payments in your account at the end of Years 1, 2, 3 and 4. Assuming an 8 percent interest rate, how large would each of your payments have to be for you to obtain the same ending balance as you calculated in part a?