4. Juan Masipag, a self-employed individual, is opening a retirement account at a bank. His goal is to accumulate Php 1,000,000 in the account by the time he retires from work in 20 years time. A local bank is willing to open a retirement account that pays 8% interest compounded annually throughout the 20 years. Juan expects that his annual income will increase by 6% yearly during his working career. He wishes to start with a deposit at the end of year 1 (A,) and increase the deposit at a rate of 6% each year thereafter. What should be the size of his first deposit (A,)? The first deposit will occur at the end of year 1, and the subsequent deposits will be made at the end of each year. The last deposit will be made at the end of year 20.

4. Juan Masipag, a self-employed individual, is opening a retirement account at a bank. His goal is to accumulate Php 1,000,000 in the account by the time he retires from work in 20 years time. A local bank is willing to open a retirement account that pays 8% interest compounded annually throughout the 20 years. Juan expects that his annual income will increase by 6% yearly during his working career. He wishes to start with a deposit at the end of year 1 (A,) and increase the deposit at a rate of 6% each year thereafter. What should be the size of his first deposit (A,)? The first deposit will occur at the end of year 1, and the subsequent deposits will be made at the end of each year. The last deposit will be made at the end of year 20.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 10P

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