(a) Rashidah intends to buy a motorcycle for his son, Ahmad, on his 20th birthday 4 years from now. Based on her survey, the price of motorcycle is approximately at RM8,000. She plans to start save money in the savings account that pays 4 percent interest annually. Compute how much should she deposit today to buy the motorcycle.

(a) Rashidah intends to buy a motorcycle for his son, Ahmad, on his 20th birthday 4 years from now. Based on her survey, the price of motorcycle is approximately at RM8,000. She plans to start save money in the savings account that pays 4 percent interest annually. Compute how much should she deposit today to buy the motorcycle.

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

Aini wishes to have 93,000USD to purchase a car in 6 years as part of her financial goals. How much should she save annually if she thinks she can earn 8% on her investments?
Lara wishes to buy a gift for her parent's golden wedding anniversary. She decided to deposit a consistent amount of money every week into her savings account at an interest rate of 1.5% and made a decision not to withdraw any amount from the account. How much money will she have after 2 years if she decided to deposit $750 each week?
Jan wants to plan for her daughter's education. Her daughter, Rachel was born today and will go to college at age 18 for five years. Tuition is currently $15,000 per year, in today's dollars. Jan anticipates tuition inflation of 6% and believes she can earn an 11% return on her investment. How much must Jan save at the end of each year, if she wants to make her last payment at the beginning of her daughter's first year of college? $4,680.37 $7,334.72 $3,882.03 $2,547.54
Suppose a husband wants to take his wife on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $24,000 inheritance from an uncle and intends to invest it for the trip. The husband estimates the trip will cost $31,000 and he believes he can earn 8% interest, compounded annually, on his investment. Complete the following table to calculate the future value. Will he be able to pay for the trip with the accumulated investment amount? Note: Use tables, Excel, or a financial calculator. Round your final answers to the nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Karen wishes to buy a gift for her parents' golden wedding anniversary. She decided to deposit a consistent amount of money every week into her savings account at an interest rate of 1.5% and made a decision not to withdraw any amount from the account. If her goal is to save $350,000 for 3 years, how much money does she need to deposit each week to reach her goal?
Rachel has a SMART goal to save for the next 7 years to purchase a $100,000 boat. She currently earns $125,000 a year. Her financial advisor believes that she can earn 4% APY on her account. If Rachel plans to save 10% of her monthly income every year, will that allow her to save enough for the boat in her time horizon?
Mr. Waleed is 25 years old and he has just started his career in the field of Marketing. Waleed has a long-term goal of purchasing his dream house at a age of 40 years, which is costing him OMR 150,000. Currently Waleed has inherited OMR 25,000 from his parents. Waleed has two options available for him as follows; Option 1 – Invest his money at compound interest rate of 10 % Semi Annually Option 2 – Invest his money at a compound interest rate of 8% Quarterly A. Compute the values under both option at the age of 40 years and advice which is the most suitable option to reach his goal? B. As of today, Waleed’s dream house is costing him OMR 150,000. Will the value be the same in 40 years’ time? Explain?
Kirk Van Houten, who has been married for 23 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $10 comma 000 in 7 years. Kirk currently has $4 comma 524 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring?
An individual (with log-utility) wants to maximize her happiness level over her adolescence and adult periods. At the age 18 the individual inherits one hundred thousand dollars and must decide how much to consume now (when she is young, period t) and how much to save for her adulthood (period t +1) to maximize the sum of utility over different life stages. The bank will pay interest rate of 5% of every dollar she deposits. The individual discounts future utilities at ß = 0.8. What is the optimal consumption in the adolescent period? 55555.56 55561.55 55558.55 55564.56

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