Payments of X are made at the beginning of each year for 20 years. These payments earn interest at the end of each year at an annual effective rate of 8%. The interest is immediately reinvested at an annual effective rate of 6%. At the end of 20 years, the accumulated value of the 20 payments and the reinvested interest is 5600. Calculate X.
Why is the interest reinvested an increasing annuity (0.08*x)?
If you reinvest each 0.08X per period, that only one 0.08X
I don't see why it goes to 2*0.08X etc etc....
Why is the interest reinvested an increasing annuity (0.08*x)?
If you reinvest each 0.08X per period, that only one 0.08X
I don't see why it goes to 2*0.08X etc etc....
Increasing Annuity
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