**Investment Problem Analysis**Leon and Heidi decided to invest $2,750 annually for only the first nine years of their marriage. The first payment was made at age 20. If the annual interest rate is 8%, how much accumulated interest and principal will they have at age 65?The accumulated interest and principal will equal $[ ] (Round to the nearest dollar.)---**Instructions for Students:**1. **Understanding the Situation:** - Leon and Heidi begin investing at age 20. - They invest $2,750 annually for 9 years. - The investments yield an annual interest rate of 8%. - Calculate the total at age 65.2. **Plan of Action:** - Determine the total amount invested over nine years. - Use the future value of an annuity formula to calculate the value at the end of the first 9 years. - Calculate the compound interest on the accumulated amount from age 29 to 65.3. **Key Concepts to Review:** - Future Value of an Annuity - Compound Interest Formula - Time Value of Money Principles4. **Tips for Calculation:** - Ensure correct rounding to the nearest dollar. - Double-check calculations. - Consider both the principal and interest earned.---

Future Value Future value refers to the value of the investment at a certain point in time in future which is growing at a constant rate. The formula for calculating the future value is based upon the formula of the compound interest.Here, Annual amount deposit for 9 years = $2750 The annual rate of interest = 8% First deposit made at the age of 20 First, the value of the deposit is to be found at the age of 29 by using the formula of the future value of the annuity Future Value of annuity = Annual Deposit ×(1+Interest rate)Number of deposit-1Interest rate=$2,750 ×(1+0.08)9-10.08=$2,750×12.4875578388=$34.340.7840567 Now this amount is left into the same account till retirement period.Number of years till retirement period from age 29 =36 Amount available at the time of retirement =Amount acccumulated at the age of 29(1+interets rate)Numbers of years to reitrement =$34,340.7840567(1+0.08)36=$548,359.5408644407 or $548,360Answer: The accumulated principal and interest at the time of retirement is $548,360

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a is Leon and Heidi decided to invest $2,750 annually for oply the first nine years of their marriage. The first payment was made at age 20. Irude annual interest rate is 8% how much accumulated interest and principal will they have at age 657 The accumulated interest and principal will equal S (Round to the nearest dollar)

a is Leon and Heidi decided to invest $2,750 annually for oply the first nine years of their marriage. The first payment was made at age 20. Irude annual interest rate is 8% how much accumulated interest and principal will they have at age 657 The accumulated interest and principal will equal S (Round to the nearest dollar)

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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You annually invest $2,000 in an individual retirement account (IRA) starting at the age of 30 and make the contributions for 15 years. Your twin sister does the same starting at age 35 and makes the contributions for 25 years. Both of you earn 7 percent annually on your investment. What amounts will you and your sister have at age 60? Use Appendix A and Appendix C to answer the question. Round your answers to the nearest dollar.Amount on your account: $ Amount on your sister's account: $ Who has the larger amount at age 60?-Select-You haveYour sister hasItem 3 the larger amount.
Since the birth of her daughter, 20 years ago, William has deposited $50 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 5.10% compounded monthly for the first 8 years and 4.00% compounded monthly for the next 12 years. a. What would be the accumulated value of the RESP at the end of 8 years? Round to the nearest cent b. What would be the accumulated value of the RESP at the end of 20 years? Round to the nearest cent c. What is the amount of interest earned during the 20 year period? Round to the nearest cent
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Mikayla and Peyton plan to send their son to university. To pay for this they will contribute 9 equal yearly payments to an account bearing interest at the APR of 8.6%, compounded annually. Four years after their last contribution, they will begin the first of five, yearly, withdrawals of $57,300 to pay the university's bills. How large must their yearly contributions be?
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