Suppose You Deposit $1,000 at the End of Each Quarter $A=\$ 1,000(F / A, 2 \%, 20)(A / F, 8 \%, 5)$

question 15

Multiple Choice

Suppose you deposit $1,000 at the end of each quarter for 5 years at an interest of 8% compounded
continuously. What equal end-of-year deposit over 5 years would accumulate the same amount at the end of 5
years under the same interest compounding (8%, compounded continuously) ? To answer the question, which of
the following is correct?

• A) \( A=\$ 1,000(F / A, 2 \%, 20)(A / F, 8 \%, 5) \)
• B) \( A=\$ 1,000\left(F / A, e^{0.02}-1,4\right) \)
• C) \( A=\$ 1,000\left(F / A, e^{0.02}-1,20\right)(A /F, 8 \%, 5) \)
• D) None of the above

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Definitions:

Loanable Funds

Financial resources available for borrowing, consisting of the savings of individuals, businesses, and the government.

Saving

The process of setting aside a portion of current income for future use or for investment.

Investment

The distribution of assets, typically financial, with the aim of earning revenue or gains.

Private Saving

The portion of households' disposable incomes that is not spent on consumption but saved for future use.