**Chapter 11 — Time Value of Money and Bond Pricing****Problem 2**In 4 years, you plan to buy a new car and will need a down payment. How much would you need to invest today in order to have $8,000 in 4 years? Assume interest rates are 4%.| | ||-----------------------------------------|-------------------------------|| **Which table will you use for the above calculation?** | || **Number of periods?** | || **Interest Rate?** | || **Factor?** | || **What is the amount of investment?** | |

Present value is that much equivalent value of future money today based on time and interest that…

4 years, you plan to buy a new car and will need a down payment. How much would you need to inve day in order to have $8,000 in 4 years? Assume interest rates are 4%. Which table will you use for the above calculation? Number of periods? Interest Rate? Factor? What is the amount of investment?

4 years, you plan to buy a new car and will need a down payment. How much would you need to inve day in order to have $8,000 in 4 years? Assume interest rates are 4%. Which table will you use for the above calculation? Number of periods? Interest Rate? Factor? What is the amount of investment?

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

You took out a loan to buy a new car. The monthly interest rate on the loanis 2.5% . You haveto pay S260 every month for 60 months.What is the present value of the cash flows if it's an annuity due?What is the future value of the cash flows if it's an annuity due?
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.64% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.)$ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.)$ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)$
One can solve for payments (PMT), periods (N), and interest rates (1) for annuities. The easiest way to solve for these variables is with a financial calculator or a spreadsheet. Quantitative Problem 1: You plan to deposit $2,100 per year for 4 years into a money market account with an annual return of 3%. You plan to make your first deposit one year from today. a. What amount will be in your account at the end of 4 years? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. Assume that your deposits will begin today. What amount will be in your account after 4 years? Do not round intermediate calculations. Round your answer to the nearest cent. $ Quantitative Problem 2: You and your wife are making plans for retirement. You plan on living 25 years after you retire and would like to have $95,000 annually on which to live. Your first withdrawal will be made one year after you retire and you anticipate that your retirement account will earn 12% annually. a.…
You are borrowing money to buy a car. If you can make payments of $280 per month starting one month from now at an interest rate of 9%, how much will you be able to borrow for the car today if you finance the amount over 5 years?
Suppose you want to purchase a home for $475,000 with a 30-year mortgage at 5.84% interest. Suppose also that you can put down 25%. What are the monthly payments? (Round your answer to the nearest cent.)$ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.)$ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
You determine you can afford $300 per month for a car. What is the maximum amount you can afford to pay for a car if the interest rate is 9% and you want to repay the loan in 5 years?
Please provide the steps to solving this problem using a financial calculator: You just opened a brokerage account, depositing $3,500. You expect the account to earn an interest rate of 9.652%. You also plan on depositing $4,500 at the end of years 5 through 10. What will be the value of the account at the end of 20 years, assuming you earn your expected rate of return?
You want to buy a $214,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan at 5.6% interest for the rest.a) How much is the loan amount going to be?b) What will your monthly payments be?c) How much of the first payment is interest?
You are going to buy an apartment, and are borrowing 5 000 000 from a bank for 10 years. The interest rate is 3% (APR), the payments are monthly. How much is the EAR that the bank will earn from the loan?
(Use Calculator or Formula Approach) Suppose you have $500 to invest and you believe that you can earn 8% per year over the next 15 years. How much would you have at the end of 15 years using compound interest?
You have just made an offer on a new home and are seeking a mortgage. You need to borrow $620,000. a. The bank offers a 30-year mortgage with fixed monthly payments and an interest rate of 0.53% per month. What is the amount of your monthly payment if you take this loan? b. Suppose you take the 30-year mortgage described in part (a). How much will you still owe on the mortgage after 10 years? a. The bank offers a 30-year mortgage with fixed monthly payments and an interest rate of 0.53% per month. What is the amount of your monthly payment if you take this loan? Your monthly payment will be $nothing. (Round to the nearest cent.) b. Suppose you take the 30-year mortgage described in part (a). How much will you still owe on the mortgage after 10 years? The remaining loan amount will be $nothing.
Answer the following question using a spreadsheet and the material in the appendix. You would like to buy a house. Assume that given your income, you can afford to pay $12,000 a year to a lender for the next 30 years. If the interest rate is 7% how much can you borrow today based on your ability to pay? What about if the interest rate is 3%? Maximum mortgage at 7%: $ Maximum mortgage at 3%: $

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