Homework Answers
1.
Amount to be deposited if interest rate is 5% = 1,000,000/1.05^20 = $376,889.48
Amount to be deposited if interest rate is 10% = 1,000,000/1.10^20 = $148,643.63
2.
C is correct - higher the rate of interest, smaller the present value of a future sum of money. The same can be seen from example above
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