# Assume the interest rate is 4.xy% where x is the integer of the average of the last three digits… 1 answer below »

Question 1

This question is to be completed in the “TVM” worksheet. Your answers should be entered into

this worksheet and a Word document, as appropriate. Clearly label your answers.

You wish to accumulate a sum of cash equal to the year of your birthday, followed by the value of

the first letter of your first name and surname. In other words, if you are Andrew Benn and you

were born in 1996, you wish to accumulate \$199 612.

Assume the interest rate is 4.xy% where x is the integer of the average of the last three digits of your

student ID and y is the integer of the standard deviation of the last three digits of your student ID.

In other words, if your ID ends with the numbers 123, then x = 2 and y = 1, so the interest rate is

4.21%. The interest rate is a continuously compounding annual rate.

The length of time you will invest your cash is equal to z where z is the product of the 2nd letters of

your first name and surname. If your first name starts from A to M, then you will be investing for z

quarters, otherwise you are investing for z half-years.

Your job is to determine how much you need to have today in order to reach that goal.

Carefully label your answers to the following questions.

a.) How much will you be needing to accumulate?

b.) What is the annual interest rate?

c.) How long will you invest the cash for?

d.) What is the amount you will need to invest today to achieve your goal, giving your answer

correct to the nearest cent?

e.) How much would you need to deposit at the start of each month in order to meet your goal?

(Research how an annuity is calculated with continuously compounding interest rates).

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