(a) How much money must you pay into an account at the end of each of 20 years in order to have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and round to the nearest $1.

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
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(a) How much money must you pay into an account at the end of each of 20 years in order to have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and round to the nearest $1. 

(b) Bank A pays 11.50% annual interest, compounded quarterly, on its savings accounts. Bank
B wants to ensure that the effective annual rate offered by bank A, with its interest being
compounded on monthly basis. Calculate the nominal rate bank B must set. 

(c) How much money must be put into a bank account yielding 3.5% (compounded annually) in order to have $1,250 at the end of 10 years (round to nearest $1)? 

(d) Which of the following investments has the highest annual percentage yield (APY)? (Assume that all CDs are of equal risk.)

Bank A that pays 8 percent interest compounded quarterly.
Bank B that pays 8 percent compounded monthly.
Bank C that pays 8.25 percent annually

Show your working to justify your decision. 

(e) You borrow an amount and agree to pay it off with one lump sum payment of $40,000 in 6 years at 10%. How much will you borrow? 

(f) How long will it take your money to triple if you invest it at 6%?

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