Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. plz give me some steps a person decides to invest

plz give me some steps A person decides to invest their money in an...

70.2K

Verified Solution

Question

Finance

plz give me some stepsimage

A person decides to invest their money in an n=6 year Add-On Certificate of deposit. The annual effective rate of the Add-On CD is i = 2.9%. The CD is funded by making deposits of size $4000 at the beginning of each year for 6 years. At the end of each year, the interest earned on the CD is withdrawn an placed into a money market account that earns an annual effective rate of interest of j = 5.8%. At the end of 6 years, the CD will contain 6*$4000. Calculate the amount in the money market account at time t=6. Hint: this is like the examples we did in class where the money market account (we called Y in our examples) will be an increasing annuity that is increasing by 2.9*$4000 each year. Thus we are looking for the future value of an increasing annuity-immediate i.e. P = 2.9*$4000 and Q = 2.9*$4000. Enter your answer to the nearest cent

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students