How much additional income will earn

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Question (a) Theo needs RM40,000 as a down payment for a house 6 years from now. He earns 3.5 percent on his savings. Theo can either deposit one lump sum today for this purpose or he can wait a year and deposit a lump sum. How much additional money must he deposit if he waits for one year rather than making the deposit today?

Question (b) You are depositing RM1,500 in a retirement account today and expect to earn an average return 7.5 percent on this money. How much additional income will you earn if you leave the money invested for 45 years instead of just 40 years?

Question (c) You are scheduled to receive annual payments of RM4,800 for each of the next 7 years. The discount rate is 8 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each vear?

Reference no: EM132609104

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