Question: (a) A person wants to save up 4000 over a period of 12 years. So that a cash payment can be made for a purchase. To have this amount 12 years from now the person will make annual deposits into a savings account that earns 3 per year. How much must each deposit be?
(b) Three alternatives are being considered. Alternative A has a planning horizon of 5 years. Alternative B has a planning horizon of 8 years and Alternative C has a planning horizon of 9 years. What is the planning horizon if the method of Least Common Multiple approach is used? What is the planning horizon if the Longest Life Approach is used?