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Two years ago, Homeless People Ltd needed to accumulate a total of $600,000 by the end of four years to acquire new facility to house the homeless people in the city. To do so, Homeless People Ltd makes equal semi-annual deposits into a fund which earns 8% per annum, interest compounded semi-annually. To date, the organization has made four equal semi-annual deposits into the fund. Unfortunately, the price of the facility has gone up so much, now the organization requires to accumulate a total of $1,000,000 in two years' time. However, the organization can from now on earn 10% per annum, interest compounded semi-annually. All monies accumulated to date will from now on earn a return of 10% per annum, interest compounded semi-annually.
a) What is the increased equal semi-annual deposit that Homeless People Ltd will need to make so that the fund will contain $1,000,000 in two years' time?
b) What is the effective annual interest rate for the "two years' time" stated in part (a)?
c) Why does money have a Time Value?
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