A student saved $3,000 per year from 1986 to 2001 (15 years) in an account with 7% interest. He stopped depositing money after year 2001, but the money was kept in the same account earning interest. In 2007 he withdrew $15,000 for down payment toward purchase of a new house. In 2012 he received an inheritance as a single payment of $30,000, which he deposited in the same account. What is the current balance of the account (2021)?

A student saved $3,000 per year from 1986 to 2001 (15 years) in an account with 7% interest. He stopped depositing money after year 2001, but the money was kept in the same account earning interest. In 2007 he withdrew $15,000 for down payment toward purchase of a new house. In 2012 he received an inheritance as a single payment of $30,000, which he deposited in the same account. What is the current balance of the account (2021)?

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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A student saved $3,000 per year from 1986 to 2001 (15 years) in an account with 8% interest. He stopped depositing money after year 2001, but the money was kept in the same account earning interest. In 2007 he withdrew $20,000 for down payment toward purchase of a new house. In 2012 he received an inheritance as a single payment of $50,000, which he deposited in the same account. What is the current balance of the account (2021)?
* Your answer is incorrect. The Lahiri family rents a room in their home on Airbnb. They deposit all of the money that they earn into a vacation fund that earns 3% that is compounded annually. Their revenues for five years of their business are shown below. Year $ 1 2 3 4 5 Revenue $1,000 $850 $1,275 $1,800 $800 In year six, they did not rent their room due to extensive remodeling. How much would be in the account at the end of year 6? Click here to access the TVM Factor Table calculator. 5,114.36 Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±5.
When Aroon was a small child, his grandfather established a trust fund for him to receive $20,000 on his 35th birthday. Aroon just turned 23. What is the value of his trust today if the trust fund earns 5 percent interest? If he had to wait until age 40 to receive the money, what is the present value today of the $20,000 to be received in 17 years? Click the following table icon to view the PVIF table: The present value, PV, of his trust today if the trust fund earns 5 percent interest is $ A LO a 863367 (Round to the nearest cent.)
Stacey deposits $ 4500 at the end of each year for 30 years into an investment fund which pays out interests at annual effective interest rate of 3 %. He is only able to reinvest this interest at an annual effective interest rate of 2 %. What is the accumulated value of his investments at the time of the last investment. Explain your work.
Five years ago, alex loaned his son Liam $20,000 to start a business. A note was executed with an interest rate of 8%, which is the Federal rate. The note required monthly payments of the interest with the $20,000 due at the end of 10 years. Liam always made the interest payments until last year. During the current year, Liam notified his father that he was bankrupt and would not be able to repay the $20,000 or the accrued interest of $1,800. Tom is an accrual basis taxpayer whose only income is salary and interest income. The proper treatment for the nonpayment of the note is: a.$3,000 deduction. b.$20,000 deduction. c.No deduction. d.$21,800 deduction.
Sam started working for the LED company on his 25th Birthday. Each month P30 was withheld from his salary and matched by an equal contribution from his employer, to be kept into a retirement fund. At the end of each year the contributions for the year were invested in a trust fund where it earned 8% interest compounded annually. Pedro retired on his 60th birthday and elected to receive an annuity of 20 annual payments, the first to be received immediately. What was the amount of each payment? DRAW THE CASH FLOW DIAGRAM. Use 4 decimal places in between process and 2 decimal for the final answer kindly substitute the values on the formula you're going to use. Thankyouu
A Civil Engineer deposited PHP7,000,000 on a bank that earns ten percent compounded annually. Seven years later he perished. His will states that his recipient is children's home which will be accepting the money in perpetuity a year after he expired. How much is the yearly fund the children's home will be receiving.
Larry purchased an annuity from N insurance company that promises to pay him $2,000 per month for the rest of his life. Larry paid $210,240 for the annuity. Larry is in good health and is 72 years old. Larry received the first annuity payment of $2,000 this month. If Larry lives more than 15 years after starting the annuity, how much of each additional payment should be included in gross income?
Your grandfather put some money in an account for you on the day you were born. You are now 16 years old and are allowed to withdraw the money for the first time. The account currently has $5,311 in it and pays an 11% interest rate. a. How much money would be in the account if you left the money there until your 25th birthday? b. What if you left the money until your 65th birthday? c. How much money did your grandfather originally put in the account? a. How much money would be in the account if you left the money there until your 25th birthday? If you left the money there until your 25th birthday, the amount in the account would be $ nearest cent.) (Round to the
In year 1, Abby purchased a new home for $200,000 by making a down payment of $150,000 and financing the remaining $50,000 with a loan, secured by the residence, at 6 percent. As of January 1, year 4 the outstanding balance on the loan was $40,000. On January 1, year 4, when her home was worth $300,000, Abby refinanced the home by taking out a $120,000 mortgage at 5 percent. With the loan proceeds, she paid off the $40,000 balance of the existing mortgage and used the remaining $80,000 for purposes unrelated to the home. During year 4, she made interest-only payments on the new loan of $6,000. What amount of the $6,000 interest expense on the new loan can Abby deduct in year 4 on the new mortgage as home-related interest expense?
Larry purchased an annuity from an insurance company that promises to pay him $9,000 per month for the rest of his life. Larry paid $946,080 for the annuity. Larry is in good health, and he is 72 years old. Larry received the first annuity payment of $9,000 this month. Use the expected number of payments in Exhibit 5-1 for this problem. a. How much of the first payment should Larry include in gross income? b. If Larry lives more than 15 years after purchasing the annuity, how much of each additional payment should he include in gross income? c. What are the tax consequences if Larry dies just after he receives the 100th payment?
On January 1, 1980, your favorite uncle John turned 43 and started saving for his retirement. He invested $18,894.75 each year on January 1 until he turned 62 on 1/1/1999 (20 total deposits). Over the 20 years, he managed to earn an effective annual rate of return of 9.50%, and he assumed he could continue to earn that rate of return until he turned 90. Looking at his account balance, he calculated that he could immediately withdraw $74,050.56 to cover living expenses for 1999. And, going forward, he could withdraw that same amount on January 1 of each year, but adjusted for a 3% inflation. That is, in 2000, he could withdraw $74,050.56 x 1.03 $76,272.08; in 2001, $74,050.56 x 1.032 $78,560.24; etc. He planned on a total of 28 withdrawals, with the last one of $164.487.70 on 1/1/2026 when he turned 89. At that point, the account balance would be zero. 501 On 1/1/2023, right after making his withdrawal for 2023, your uncle decided to become a Tibetan monk. He left you the balance of his…

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