29. A. $ You can earn a market rate of 6%. A. What is the monthly payment amount necessary to save $25,000 by the end of 5 years? B. If you borrow $25,000 today what is the amount of the monthly payment to pay it off in 5 years? & B. $ (Round to nearest dollar)
29. A. $ You can earn a market rate of 6%. A. What is the monthly payment amount necessary to save $25,000 by the end of 5 years? B. If you borrow $25,000 today what is the amount of the monthly payment to pay it off in 5 years? & B. $ (Round to nearest dollar)
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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Question
Question 29
Transcribed Image Text:TIME VALUE OF MONEY (use BAII Plus Financial
Calculator to answer questions 25 – 30). If you do not
have a financial calculator use the Preferred Short Cut
Factor Tables spreadsheet found in Canvas Modules.
25. $
You plan to start your own business in
5 years once you graduate from college and get situated.
You plan save $250 every month for the next 5 years.
The market rate you can earn is 9%; how much will your
investment accumulate to when you are ready to start
your business? (Round to nearest dollar)
26. $
Your favorite aunt has committed to
provide you with $30,000 for a down payment for your
first home. You mentioned to her you plan to buy a home
in 6 years. She agrees to set aside money for you today
so she will have money to give you when you purchase
your first home. The market rate she can earn over the
investment period is 6% and it will compound quarterly,
what amount will she set aside today? (Round to nearest
dollar)
27. $
You won the lottery when the jackpot
was advertised at $3,000,000 (based on annual
payments of $100,000 for 30 years). Your choice is to
take the annual payments for 30 years or take the lump
sum payout today which is the present value of the
advertised jackpot. The lottery administration uses a
3.5% interest rate. What is the value of the lump sum
payout? (Round to nearest dollar)
Transcribed Image Text:27. $
was advertised at $3,000,000 (based on annual
payments of $100,000 for 30 years). Your choice is to
take the annual payments for 30 years or take the lump
sum payout today which is the present value of the
advertised jackpot. The lottery administration uses a
3.5% interest rate. What is the value of the lump sum
payout? (Round to nearest dollar)
You won the lottery when the jackpot
28. $
Your favorite uncle wants to give each
of his favorite nieces and nephews $30,000 now while he
is still alive so he can appreciate the benefit of their
gratitude. Your goal is the save the money he gives you
so when you get older, you'll have money to start a
family. What will be the value of your investment if the
rate you can earn on your investments is 8%,
compounding semi-annually for 7 years? (Round to
nearest dollar)
29. A. $
& B. $
(Round to nearest dollar)
You can earn a market rate of 6%.
A. What is the monthly payment amount necessary to
save $25,000 by the end of 5 years?
B. If you borrow $25,000 today what is the amount of the
monthly payment to pay it off in 5 years?
You would like to start saving
for retirement. Assuming you are now 22 years old
and you want to retire at age 60, you have 38 years to
watch your investment grow. You decide to invest in
the stock market, which you expect it to earn about 6%
per year into the future. You decide to invest $550 at
the end of each month for the next 38 years (456
months). Calculate your accumulated investment at the
end of 38 years. (Round to nearest whole dollar)
30.
$
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