4 How much should you invest today at A% to accumulate $X in Y years?X=Y=A=$930,00031 years12%A=B=C=D=5 Margo paid $A per month for B years to pay off a mortgage on her house. If her down payment was $C andinterest rate was D% compounded monthly, what was the purchase price of the house?Page 2$550Try Again28 years$5,2006%Try Again

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Answered: 4 How much should you invest today at…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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25. Mary plans to retire in 15 years and would like to have $1,000,000 in her account. If the interest on her account is 5.9% compounded monthly, how much should she put into her account every month? A. $346.80 B. $3,467.97 C. $5,555,56 D. $2,033.58
QUESTION 5 Jill buys a house for $100,000 with no mortgage. Jill's buying costs were 5% of the house price. Jill lives there for exactly 30 years and sells it. Suppose the price of Jill's house grows 4.5% per year (compounded annually) and selling expenses are 8% of the sales price. Suppose Jill's annual cost of ownership net of tax savings is exactly equal to the annual rent she would have paid to live in the same house. What is Jill's annual IRR from owning net of renting? O A. 4.33% O B. 4.50% OC. 4.04% OD.4.21%
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?
14. Loan amortization and capital recovery After Shipra got a job, the first thing she bought was a new car. She took out an amortized loan for $45,000—with no ($0) down payment. She agreed to pay off the loan by making annual payments for the next four years at the end of each year. Her bank is charging her an interest rate of 10% per year. Yesterday, she called to ask that you help her compute the annual payments necessary to repay her loan. Calculate the annual payment and complete the following loan amortization table: Year Beginning Amount Payment Interest Paid Principal Paid Ending Balance 1 $45,000.00 2 3 4 -$0.02
Assume you borrow $200,000 from a bank today to buy a house at 4% interest for 30 years with monthly payments. How much will the monthly payment be? How much interest will you pay over the course of the loan? How much equity do you have in the house after 6 years? What will the loan balance be at the end of year 20? How much interest paid during year 5?
5. You take $100 to your local savings bank to invest for five years. You are given the choice of two investments by the banker Notifications Time Left 00:00:28 ? Guide Me 1. You can Invest in a regular savings account that pays you 14.00% interest each year with interest compounded annually. That is each year the interest you can gets deposited in your bank account and earns interest until the end of the five years. it. You can invest in a special account that pays you 20.00% interest each year, the catch is that the interest does not compound, Rattier each year the interest payrrient is put into a special account which collects no further interest and cannot be reinvested anywhere until the end of the five years Which option should you select and why? a, Select Option i: It earns $44.63 more than Optianill b. Both Options earn you the same amount of money so you are indifferent between the two c. Select Option it It earns $7.46 more than Option d. Select Option it It earns $30.00…
iv Jaimie just graduated and would like to purchase a house in 4 years. If she has $215 automatically invested out of each paycheck at the end of each month for 4 years into an emerging markets value fund paying 11% (compounded monthly), how much of a down payment will she have at the end of 4 years? a. $133,058 b. $12,891 c. $12,600 d. $130,000 e. $12,461
Question 4 Jim and Nancy just got married today. They want to start saving so they can buy a house five years from today. The average house in their town today sells for $150,000. Housing prices are expected to increase 4.5 percent a year. When they buy their house five years from now, Jim and Nancy expect to get a 30-year (360-month) mortgage with a 7 percent nominal interest rate. They want the monthly payment on their mortgage to be $700 a month. Jim and Nancy want to buy an average house in their town. They are starting to save today for a down payment on the house. The down payment plus the mortgage will equal the expected price of the house. Their plan is to deposit $2,500 in a brokerage account today and then deposit a fixed amount at the end of each of the next five years. Assuming that the brokerage account has an annual return of 8 percent, how much do Jim and Nancy need to deposit at the end of each year in order to accomplish their goal?
Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $160,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment? O 2.28% O 2.20% O 2.22% 2.33% 2.59%
Item 3 Christina Sanders is concerned about the financing of a home. She saw a small Cape Cod–style house that sells for $90,000. If she puts 10% down, what will her monthly payment be at (a) 30 years, 5%; (b) 30 years, 512%512% ; (c) 30 years, 6%; and (d) 30 years, 612%612% ? What is the total cost of interest over the cost of the loan for each assumption? (Round your answers to the nearest cent.)
After retirement, you expect to live for 25 years. You would like to have $90,000 in income each year. How much should you have saved in your retirement account to receive this income if the annual interest rate is 9 percent per year? (Assume that the payments start one year after your retirement.) Multiple Choice $884,032.16 $99.986.08 $2,250,000.00 $1,456,153.94
10. Loan amortization and capital recovery After Shipra got a job, the first thing she bought was a new car. She took out an amortized loan for $45,000-with no ($0) down payment. She a to pay off the loan by making annual payments for the next four years at the end of each year. Her bank is charging her an interest rate of 10% year. Yesterday, she called to ask that you help her compute the annual payments necessary to repay her loan. Calculate the annual payment and complete the following loan amortization table: Year Beginning Amount 1 2 3 4 $45,000.00 Payment Interest Paid Principal Paid Ending Balance -$0.02

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