TIME VALUE OF MONEY It is now January 1, 2009; and you will need $1,000 on January 1,2013, in 4 years. Your bank compounds interest at an 8% annual rate.a. How much must you deposit today to have a balance of $1,000 on January 1, 2013?b. If you want to make four equal payments on each January 1 from 2010 through 2013 toaccumulate the $1,000, how large must each payment be? (Note that the paymentsbegin a year from today.)c. If your father offers to make the payments calculated in Part b ($221.92) or to give you$750 on January 1, 2010 (a year from today), which would you choose? Explain.d. If you have only $750 on January 1, 2010, what interest rate, compounded annually for3 years, must you earn to have $1,000 on January 1, 2013?e. Suppose you can deposit only $200 each January 1 from 2010 through 2013 (4 years).What interest rate, with annual compounding, must you earn to end up with $1,000 onJanuary 1, 2013?f. Your father offers to give you $400 on January 1, 2010. You will then make sixadditional equal payments each 6 months from July 2010 through January 2013. Ifyour bank pays 8% compounded semiannually, how large must each payment befor you to end up with $1,000 on January 1, 2013?g. What is the EAR, or EFF%, earned on the bank account in Part f? What is the APR
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