2. Jeffrey purchased a new car. He wishes to set aside enough money in a bank account to pay maintenance on the car for the first 5 years. It has been estimated thatthe maintenance cost is as follows:YegrMaintenance Cost1P67208400310,080411,76013,440Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest. How much should Jeffrey deposit in the bank now?

Interest Rate = 5% Year Maintenance Cost 1 6720.00 2 8400.00 3 10080.00 4 11760.00 5…

2. Jeffrey purchased a new car. He wishes to set aside enough money in a bank account to pay maintenance on the car for the first 5 years. It has been estimated that the maintenance cost is as follows: Year Maintenance Cost 1 P6720 8400 10,080 4 11,760 13,440 Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest. How much should Jeffrey deposit in the bank now?

2. Jeffrey purchased a new car. He wishes to set aside enough money in a bank account to pay maintenance on the car for the first 5 years. It has been estimated that the maintenance cost is as follows: Year Maintenance Cost 1 P6720 8400 10,080 4 11,760 13,440 Assume the maintenance costs occur at the end of each year and that the bank pays 5% interest. How much should Jeffrey deposit in the bank now?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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John borrowed P4500 cash from his friend. His friend's condition is that he must pay his debt in 2 years with an interest of 3% one time payment only. However, john plans to set aside an amount of money in his piggy bank every 3months with an interest of 4% compounded quarterly until he can accumulate the total debt and pay it one time to his friend. How much money must John set aside every 3months?
You decide to purchase your own property. The estimated purchase price is $1,600,000. You obtain 90% financing from the bank, 7% fixed rate for 25 years. How much do they have to pay the bank every year? How much do you still owe the bank in 14 years?
Find the monthly payment for each loan below. Remember to assume monthly compounding. 11. Sean and Sam purchase a house with a $20,000 down payment. The purchase price of the house was $475,000 and they financed the rest for 3.75% for 30 years. Their annual taxes will be $2856, and their annual insurance will be $1984. What will their monthly principal, interest, tax, and insurance (PITI) mortgage payment be?
(a) Heather borrowed $5000 from her grandmother as a down payment on her first car. She promised to repay the debt in 2 years at 7% per annum, simple interest. How much should Heather repay her grandmother? (b) How much must Jason deposit in a special account paying interest at the rate of 9.5% to receive $75.21 in interest after 6 months? (c) An investment of $4500 gained $337.50 in intesest in 9 months. What rate of yearly intesest did the investment pay?
4. A friend was left $50,000 by his uncle. He has decided to put it into a savings account for the next year or so. He finds there are varying interest rates at savings institutions: a) 2.25% compounded every two months, b) 2.30% compounded quarterly, and c) 2.20% compounded continuously. He wishes to select the savings institution that will give him the highest return on his money. What interest rate should he select?
An individual makes five annual deposits of P 2,000 in a savings account that pays interest at a rate of 4% per year. One year after making the last deposit, the interest rate changes to 6% per year. Five years after the last deposit the accumulated money is withdrawn from the account. How much is withdrawn? Select one: a. P 16,701 b. P 12,356 c. P 15,824 d. P 14,223**please do not use excel
Kerri James is considering the purchase of a car, which will cost her $24,600. She will borrow the entire purchase price and make monthly payments over the next six years. The first payment is due next month and the annual interest rate is 3.00%. She will owe $____ on the car immediately following the 18th payment. A. 18,858.19 B. 18,531.57 C. 20,757.33 D. 19,184.00 E. 23,258.56
Nona purchased a new car earlier today for $24,000. She financed the entire amount with a five-year loan that has a 6 percent interest rate (compounded monthly). a. Compute the monthly payments for the loan. Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ b. How much will Nona owe on the loan after she makes payments for 2 years (i.e., after 24 payments)? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $
Zappy Inc. designs a new financial instrument that called the SafetyNet. This instrument gives the holder access to the following cashflows: For the first 4 years, the holder receives $95 per year starting one year from today (a total of 4 payments). The holder does not receive any cashflows for year 5. Starting at the end of year 6, the holder receives $60 growing at a rate of 4% per year forever. The holder has to pay a “service fee” of $7 every year starting at the end of year 2; this goes on forever. The prevailing discount rate throughout is 6%. The financial engineer would like to determine a fair market price for this financial instrument. What do you suggest this price to be? Please show your work.
Use the appropriate formula located on Illustration 10-1 on page 209 to solve the problem. Bob deposits $5000 at the end of each 6 months for 14 years in an account paying 6% interest compounded semiannually A) Find the amount he will have on deposit at maturity. B) How much interest did Bob earn? Hint: Find the total amount that was deposited by multiplying the total number deposits with amount of each deposit and then subtracting this from the future value. Show the use of the appropriate formulas for each part by indicating the evaluation of the formula with information and provide the answers. Be sure to parts using the provided letters and organize your work neatly.
Nona purchased a new car earlier today for $33,000. She financed the entire amount with a six-year loan that has a 6 percent interest rate (compounded monthly). a. Compute the monthly payments for the loan. Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ b. How much will Nona owe on the loan after she makes payments for 3 years (i.e., after 36 payments)? Do not round intermediate calculations. Round your answer to the nearest cent. Enter your answer as a positive value. $ tA
A man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1200 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1700 for the trip? Assume that the interest on the loan is computed using simple interest The rate he must obtain is ___%

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