A young couple wants to have a college fund that will pay $20,000 at the end of each half-year for 8 years. (a) If they can invest at 6%, compounded semiannually, how much do they need to invest at the end of each 6-month period for the next 18 years to begin making their college withdrawals 6 months after their last investment? (Round your answer to the nearest cent.) $ (b) Suppose 8 years after beginning the annuity payments, they receive an inheritance of $36,000 that they contribute to the account, and they continue to make their regular payments as found in part (a). How many college withdrawals will they be able to make before the account balance is $0? (Round your answer to the nearest whole number.) withdrawals

A young couple wants to have a college fund that will pay $20,000 at the end of each half-year for 8 years. (a) If they can invest at 6%, compounded semiannually, how much do they need to invest at the end of each 6-month period for the next 18 years to begin making their college withdrawals 6 months after their last investment? (Round your answer to the nearest cent.) $ (b) Suppose 8 years after beginning the annuity payments, they receive an inheritance of $36,000 that they contribute to the account, and they continue to make their regular payments as found in part (a). How many college withdrawals will they be able to make before the account balance is $0? (Round your answer to the nearest whole number.) withdrawals

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 needs to borrow $7,000 to pay for college. She can get a loan at an APR of 10% to paid off in monthly installments over the next 4 years. If she decides to pay the loan off in monthly installments over 3 years instead of 4 years at the given APR, how much money will she save altogether. Round to the nearest cent
K Suppose someone wants to accumulate $65,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $55 per month into an account with an APR of 7%. ... Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) O A. No, because the amount that will be in the college fund, $ is less than the goal of $65,000. OB. Yes, because the amount that will be in the college fund, $ is more than the goal of $65,000. 3
Use the savings plan formula to answer the following question. Your goal is to create a college fund for your child. Suppose you find a fund that offers an APR of 5%. How much should you deposit monthly to accumulate $88,000 in 12 years? You should invest $ each month. (Do not round until the final answer. Then round to two decimal places as needed.)
1. A civil engineer planning for her retirement places 10% of her salary each year into a high-technology stock fund. If her salary this year (end of year 1) is $160,000 and she expects her salary to increase by 3% each year, what will be the future worth of her retirement fund after 15 years provided it earns 7% per year? 2. A company that manufactures purgable hydrogen sulfide monitors will make deposits such that each one is 7% larger than the preceding one. How large must the first deposit at the end of year I be if the deposits extend through year 10 and the fourth deposit is $5550? Use an interest rate of 10% per year.
You want to go to Hawaii as a graduation gift to yourself. You start investing when you're a Freshman and you begin with a deposit of $450. You are able to deposit $400 per quarter over your next 4 years of college. Your investment is earning a 6% nominal interest rate compounded quarterly. How much will you expect to have at the end of your Senior year? Which of the solutions below best represents the proper calculation? A. $450(F/A, 8%, 4) + $400(F/A, 8%, 4) B. $450(F/P, 8%, 16) + $400(F/A, 8%, 16) C. $450 (F/P,2%, 16) + $400(F/A, 2%, 16) D. $450 (F/P, 2%, 4) + $400 (F/A, 2%, 4)
2. (a) A college student, Amy, decides to fund a retirement account with $2000 per year for 8 years, with the first deposit made one year from today. The rate of return will be 10%. How much will she have in her account when she retires in 40 years? (b) Amy’s friend, Dacio, decides he will start funding his retirement account 8 years from now (first payment in 9 years). He then will invest $2000 each year for 32 years. If his rate of return is 10%, how much will he have when he retires in 40 years?
A family want to have a $213,000.00 higher education fund for their children at the end of 19 years. How much should they contribute at the end of quarterly if they can get 6.1% compounded quarterly on their investment? If needed, round to 2 decimal places. The quarterly payments are $ Submit Question
What lump sum do parents need to deposit in an account earning 10%, compounded monthly, so that it will grow to $70,000 for their son's college fund in 13 years? (Round your answer to the nearest cent.) $
Use the savings plan formula to answer the following question. Your goal is to create a college fund for your child. Suppose you find a fund that offers an APR of 4%. How much should you deposit monthly to accumulate $87,000 in 15 years? You should invest $ each month. (Do not round until the final answer. Then round to two decimal places as needed.)
Suppose a recent college graduate's first job allows her to deposit $250 at the end of each month in a savings plan that earns 9%, compounded monthly. This savings plan continues for 11 years before new obligations make it impossible to continue. If the accrued amount remains in the plan for the next 15 years without deposits or withdrawals, how much money will be in the account 26 years after the plan began? (Round your answer to the nearest cent.) $
Jennifer Davis is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $28,000 for the down payment. If Jennifer can invest in a fund that pays 7.0 percent annual interest, compounded quarterly, how much will she have to invest today to have enough money for the down payment? (Round intermediate calculations to 6 decimal places, e.g. 2.512512 and final answer to 2 decimal places, e.g. 2,515.25.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Amount to be invested today
Paul and Donna Kelsch are planning a Mediterranean cruise in 5 years and will need $9,500 for the trip. They decide to set up a sinking fund" savings account for the vacation. They intend to make regular payments at the end of each 3-month period into the account that pays 8% interest compounded quarterly. What periodic sinking fund payment will allow them to achieve their vacation goal? Round your answer to the nearest cent. Do not round intermediate calculations.

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