Would you expect the ratio to be this large or this small?

You wish to deposit a constant amount into a bank account every month in order to build up a substan Show more You wish to deposit a constant amount into a bank account every month in order to build up a substantial amount of savings for your use at a distant date. The bank account pays 1% monthly interest which we will assume that will not change into the indefinite future. Answer the following questions based on this scenario. For each part below obtain your answer both analytically and by using a suitable excel function. a) You wish to eventually have accumulated 1500000 TL in the account. How much time (e.g. YY years and MM months) will it take you to achieve this goal if you deposit 1500 TL every month? b) If you want to achieve your goal of 1500000 TL in 16 years (exactly 1216 = 192 months) how much do you need to deposit per month? c) Once you have achieved your goal of 1500000 TL you want to make monthly withdrawals of 20000 TL per month. For how long will the money in the account last? d) Again once you have achieved your 1500000 TL goal in the account if you want to deplete your account in 192 months (i.e. the same time it took you to accumulate all of it as asked in Part (b)) how much can you withdraw per month? e) In light of your answers to parts (b) and (d) what is the ratio of the deposit amount in Part (b) to the withdrawal amount in Part (d)? Would you expect the ratio to be this large or this small? How would you expect this ratio to change if the length of deposits and withdrawals are both equally increased or decreased (e.g. what if both are 5 years or what if both are 25 years)? Explain coherently. If you cant build a rigorous analytical argument you can perform an numerical analysis with Excel and support your arguments with appropriate charts. Show less

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