Hello,
In exercise 4 a) , if he deposits the 2000 in three years from now, shouldn't the first payment be on the 4th year? Why is T first payment 3 and and T investment 38 instead of 37?
Thank you in advance
Hi,
I agree it is a bit confusing. Let´s simplify it and say that Mr. Forbes will deposit 2000 next year and repeat the process until 3 years from now. Assume we are in 2020.
2020 - > No savings
2021 -> 2,000
2022 -> 2,000
2023 -> 2,000
You can see that we start at year 1 and have three years with investment (3-1+1).
Instead, let's say that Mr. Forbes will deposit 2000 in two years and repeat the process until 3 years from now. Assume we are in 2020.
2020 - > No savings
2021 -> No savings
2022 -> 2,000
2023 -> 2,000
Now we have 2 years of investment (3-2+1)
I agree it is a bit confusing. Let´s simplify it and say that Mr. Forbes will deposit 2000 next year and repeat the process until 3 years from now. Assume we are in 2020.
2020 - > No savings
2021 -> 2,000
2022 -> 2,000
2023 -> 2,000
You can see that we start at year 1 and have three years with investment (3-1+1).
Instead, let's say that Mr. Forbes will deposit 2000 in two years and repeat the process until 3 years from now. Assume we are in 2020.
2020 - > No savings
2021 -> No savings
2022 -> 2,000
2023 -> 2,000
Now we have 2 years of investment (3-2+1)