3. Give your answers to parts (a) to (e) to the nearest dollar. On Jake's 16th birthday his parents gave him options of how he might receive his monthly allowance for the next two years. Option A $50 each month for two years. Option B $5 in the first month, $10 in the second month, $15 in the third month, increasing by $5 each month for two years. Option C Investing $1000 at a bank at the beginning of the first year, with an interest rate of 6% per annum, compounded monthly. Jake does not spend any of his allowance during the two year period.

3. Give your answers to parts (a) to (e) to the nearest dollar. On Jake's 16th birthday his parents gave him options of how he might receive his monthly allowance for the next two years. Option A $50 each month for two years. Option B $5 in the first month, $10 in the second month, $15 in the third month, increasing by $5 each month for two years. Option C Investing $1000 at a bank at the beginning of the first year, with an interest rate of 6% per annum, compounded monthly. Jake does not spend any of his allowance during the two year period.

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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Similar questions

A couple plans to save for their child's college education. What principal must be deposited by the parents when their child is born in order to have 39,000$ When the child reaches the age of 18? Assume the money earns 7% interest, compounded quarterly.?round your answer to two decimal places.
2. (a) A college student, Amy, decides to fund a retirement account with $2000 per year for 8 years, with the first deposit made one year from today. The rate of return will be 10%. How much will she have in her account when she retires in 40 years? (b) Amy’s friend, Dacio, decides he will start funding his retirement account 8 years from now (first payment in 9 years). He then will invest $2000 each year for 32 years. If his rate of return is 10%, how much will he have when he retires in 40 years?
New parents wish to save for thier newborn's education and wish to have $36,000 at the end of 18 years. How much should the parents place at the end of each year into a savings account that earns an annual rate of 5.6% compounded annually? (round your answer to two decimal places). How much interst would they earn over the life of the account? Determine the value of the fund after 12 years.
Jessica wants to accumulate $13,000 by the end of 6 years in a special bank account, which she had opened for this purpose. To achieve this goal, Jessica plans to deposit a fixed sum of money into the account at the end of the month over the 6-year period. If the bank pays interest at the rate of 5% per year compounded monthly, how much does she have to deposit each month into her account? (Round your answer to the nearest cent.)
A student plans to deposit P 2,000 in the bank now and another P 5, 000 each year for the next two years. He withdrew P 5, 000, four years after his last deposit was made. What will be the amount of money left in the bank on the day the withdrawal will be made? Money is worth a 12% CSA rate.
Slick Sam has a special relationship with his banker. The nature of the relationship is as follows: • The bank owes Sam $100 per year forever. The 1st payment is due in 1 year. • The bank will borrow or lend money to Sam at a constant effective rate of i per year. Today, Sam calculated the present value of the payments that are due to him as X. Sam can receive his first 16 payments at the end of year 16 in a lump sum. If he does that, then the total value of the lump sum and future payments at the end of the sixteenth year is X + 2,000. Calculate X. A B с D E 3,330 3,350 3,400 3,450 3,500
Abby Ellen wants to attend Ithaca College. She will need $75,000 6 years from today. Assume Abby's bank pays 6% interest compounded semi-annually. What must Abby deposit today to have $75,000 in 6 years?
How much more money should be invested now in order to receive $1,250.00 at the beginning of each month for 10 months instead of $260.00 at the beginning of each month for 30 months? Assume an interest rate of 5.00% compounded annually. How much should Robert's dad invest in a savings account today, to be able to pay for Robert's rent for the next five years, if the rent is $450, payable at the beginning of each month? The savings account earns 3.26% compounded monthly.
An electrical engineer who is anticipating paying for his daughter’s college education plans to start depositing money now (year 0) and continue through year 17. If he deposits $5000 each year, how much will his daughter be able to withdraw each year starting in year 18 and continuing through year 22? Assume the account earns interest at 8% per year.
A couple decided on the following saving plan for their newborn child 0 years old. Each quarter after the child is born, they will deposit $2,125 into a savings account paying 7.35% interest compounded quarterly. How much money will be in the account when the child turns 18? Hint: Total of 18 years. Round answer to nearest cent.
If David Jones wants to save for his child's college tuition in 20 years, how much money should he build into his tuition account at the end of each year in order to be able to withdraw 110,000/year for 4 years. Assuming a 4% interest rate before the child goes to college and a 5% interest rate after the child goes to college, calculate yearly contribution to David Jones.

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