A certain amount of investment was made annually for 10 years at an interest rate of 6%. On the 14th year, withdrawals of 10,000 per year can be made for 5 years and an indefinite withdrawal of 5000 per year after. If the investment will stop at the 5th year, how much should be invested on the 5th year to get the same amount of withdrawals on the same period? All payments and withdrawals are made at the beginning of each year.

A certain amount of investment was made annually for 10 years at an interest rate of 6%. On the 14th year, withdrawals of 10,000 per year can be made for 5 years and an indefinite withdrawal of 5000 per year after. If the investment will stop at the 5th year, how much should be invested on the 5th year to get the same amount of withdrawals on the same period? All payments and withdrawals are made at the beginning of each year.

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

Eleven years from now you would like to withdraw $20,000 a year for a period of 5 years (periods 11 through 15) plus the additional amount of $30,000 in year 15. Assuming a growth rate of 8.00%, what amount must you deposit today to make these future withdrawals a reality?
You have borrowed $60,000 at an interest rate of10.5%. Equal payments will be made over a five-yearperiod. (The first payment will be made at the end ofthe first year.) What will the annual payment be, andwhat will the interest payment be for the fourth year?
A four-year investment requires annual deposits of $300 at the beginning of each year. The deposits earn 9% per year. What is the investment's future value? Remember, the deposits are made at the beginning of each year (annuity due). A four-year investment requires annual deposits of $300 at the beginning of each year. The deposits earn 9% per year. What is the investment's future value? Remember, the deposits are made at the beginning of each year (annuity due). $1,495.41 $1,459.98 $1,425.22 $1,391.12 $ 1,357.69
For 10 years with total payments of $ 10000 per year, calculate the total amount accumulated after 10 years if payments are continuous and compare the results. Annual interest is 20 percent. (1 year = 365 days will be taken)
An investment pays $4,000 per year at the beginning of each year for the next 4 years and then $6,000 per year at the beginning of each year for the next 6 years. Using a discount rate of 8%, what is the GPV of these payments?
A deposit X is to be made today and a second deposit, which is twice the first, is to be made 3 years from now, to provide for withdrawals of $1,000 two years from now and $6,500 10 years from now. At an effective annual interest rate of 7%, calculate the size of the first deposit.
Suppose you borrowed $ 15 000 at 8% monthly interest to repay it in monthly installments over 4 years. At the end of the first year (after 12 payments), you want to negotiate with the bank to pay off the remainder of the loan as in the following plan: The next payment will be made in the sixth month of the 2nd year in the amount G and will continue to increase linearly in the amount G every 3 months. Then what is G?
An investment offers $6,800 per year for 20 years, with the first payment occurring one year from now. a. If the required return is 7 percent, what is the value of the investment today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value today be if the payments occurred for 45 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What would the value today be if the payments occurred for 70 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What would the value today be if the payments occurred forever? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value b. Present value C. Present value d. Present value
An investment offers $3,850 per year for 15 years, with the first payment occurring one year from now. a. If the required return is 6 percent, what is the value of the investment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value be if the payments occurred for 40 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What would the value be if the payments occurred for 75 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What would the value be if the payments occurred forever? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value of 15 annual payments b. Present value of 40 annual payments c. Present value of 75 annual payments d. Present value of annual payments forever
A sum of $20,000 is borrowed at an interest rate of 8 percent on the unpaid balance compounded semiannually, The loan is to be paid back with 10 equal payments in 20 years The payments are to bo made every 2 years, starting at the end of the second year. What is the amount of each biennial payment?
a) In how many years will a single investment of $1,000 made now, increase to $2,000 if the interest rate is 3% per year? b) A savings certificate costing $80 now will pay $113.48 in 6 years. What is the effective annual interest rate if compounding takes place monthly? And what is the nominal annual interest rate compounded monthly? c) How much money would be accumulated 18 years from now, if an equal amount of money is invested at the end of each year, and if over 30 years the amount of money accumulated would amount to $200,000 and the interest rate is expected to average 4% over the entire time?
An investment company has presented you with four investment proposals for the next six years with a fixed 9% annual interest rate: a) invest €5,000 now; b) invest €1200 at the end of each year for the next 5 years; c) invest €3000 now and in addition €500 at the end of each year for the next 5 years; d) invest €2000 at the end of the first, third and fifth years. Assuming this is the beginning of your first year, which investment offer allows you to accrue the most?

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