4. You are saving up for a cruise after graduation. The cruise will cost $1,500. How much must your save monthly if graduation is 19 months away and the current interest rate in your savings account is 2%? a. Assume your first deposit happens at the end of the month and the last deposit happens at the end of the 19th month $78.95 i. ii. $77.40 iii. $65.67 iv. $77.77 b. Assume your first deposit happens today and the last deposit happens at the end of the 18th month $77.64
4. You are saving up for a cruise after graduation. The cruise will cost $1,500. How much must your save monthly if graduation is 19 months away and the current interest rate in your savings account is 2%? a. Assume your first deposit happens at the end of the month and the last deposit happens at the end of the 19th month $78.95 i. ii. $77.40 iii. $65.67 iv. $77.77 b. Assume your first deposit happens today and the last deposit happens at the end of the 18th month $77.64
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3PB: Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate...
Related questions
Question
Transcribed Image Text:4. You are saving up for a cruise after graduation. The cruise will cost $1,500. How much must
your save monthly if graduation is 19 months away and the current interest rate in
your savings
account is 2%?
a.
Assume your first deposit happens at the end of the month and the last deposit happens at
the end of the 19th month
i.
$78.95
ii. $77.40
iii. $65.67
iv. $77.77
b. Assume your first deposit happens today and the last deposit happens at the end of the
18th month
i. $77.64
ii. $77.90
iii. $79.33
iv. $76.24
5. Your rich great grandmother just passed away and left you $1 million dollars. She also attended
UNO. You decided to set up a scholarship fund in her honor.
a.
You want to offer a full-ride scholarship in the amount of $25,000 per year forever. If
the interest rate = 4%, how much money will you have left over for yourself after paying
the endowment?
i. $250,000
ii. $375,000
iii. $625,000
iv. $750,000
b. If you decide to give half of your inheritance to the university, how big of a scholarship
per year can you fund if the interest rate = 4%?
i. $20,000
ii. $5,000
iii. $40,000
iv. $25,000
6. You plan on saving $100 per month (at the end of every month) towards retirement, and you plan
to retire in 45 years. Assume the interest is 3% compounded monthly, and that you currently
don't have any funds in the retirement account.
a.
How much will you have in your retirement account when you retire?
i. $114,322.39
ii. $9,271.99
iii. $54,000.00
iv. $114,037.30
b. Things happened along the way, and you were able to save $100 per month the first 4
years, then nothing for the next 15 years, then $200 per month for the remainder of the
months until retirement. How much will you have at retirement?
i. $99,441.11
ii. $29,017.91
iii. $67,200.00
iv. $111,746.00
7.
Transcribed Image Text:7. You are able to save $30 every month (at the end of every month). How long will it take you to
afford a $2,000 gaming PC if interest rate = 3%, compounded monthly?
a.
Assume you currently don't have any savings
i. 61.74 months
ii.
66.67 months
iii.
37.17 months
iv. 36.97 months
b. Assume you already have $1,000 in your savings account
i. 17.72 months
ii. 33.33 months
iii. 29.68 months
iv.
38.17 months
8. Your uncle just retired. He has $800,000 in his savings account. He believes he will live another
25 years. How much money can he live on monthly (assume that he withdraws his first month's
spending today, not at the end of the month)?
a. If the interest rate = 10%
i. $7,209.53
ii. $6,676.85
iii. $597.96
iv. $7,269.61
b. If the interest rate = 4%?
i. $4,267.46
ii. $4,222.69
iii. $4,391.60
iv. $4,208.67
c. He sadly passes away 5 years after his retirement. How much money does he have at the
time of his passing (assume 4% interest rate)?
i. $546,638.32
ii. $949,615.01
iii. $696,836.93
iv. $697,767.03
9. You plan to retire in 45 years and would like to be able to spend $4,000 a month (at the end of
every month) in retirement, and you estimate that you will live for 25 years in retirement. How
much do you need to save per month (end of every month) between now and retirement to meet
your goal?
a. Assume interest rate = 5%
i. $175.52
ii. $353.01
iii. $337.66
iv. $2,222.22
b. Assume interest rate = 10%
i. $41.99
ii. $606.06
iii. $9,828.96
iv. $506.30
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College