After reviewing the CPI inflation calculator at inflationdata.com, Hanna Lind realized the importance of creating an investment plan for her future. She would need $10,997.34 in 2018 to have the same purchasing power her $8,800 (stored in a fireproof safe in her home since 2000) had when she put it there. To protect her savings against further inflation and to help her prepare for a healthy financial future, Hanna deposits her $8,800 in an investment account in 2018 earning 4% interest compounded quarterly. How much will Hanna have in her account in 2028? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

After reviewing the CPI inflation calculator at inflationdata.com, Hanna Lind realized the importance of creating an investment plan for her future. She would need $10,997.34 in 2018 to have the same purchasing power her $8,800 (stored in a fireproof safe in her home since 2000) had when she put it there. To protect her savings against further inflation and to help her prepare for a healthy financial future, Hanna deposits her $8,800 in an investment account in 2018 earning 4% interest compounded quarterly. How much will Hanna have in her account in 2028? (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

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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After reviewing the CPI inflation calculator at inflationdata.com,Hanna Lind realized the importance of creating an investment plan for her future. She would need $10,773.00 in 2018 to have the same purchasing power her $9,100 (stored in a fireproof safe in her home since 2000) had when she put it there. To prevent her savings against further inflation and to help her prepare for a healthy financial future, Hanna deposits her $9,100 in an investment account in 2018 earning 6% interest compounded quarterly. How much will Hanna have in her account in 2018? Round your answer to the nearest dollar amount.
7. Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply. O An annuity is a series of equal payments made at fixed intervals for a specified number of periods. An annuity due earns more interest than an ordinary annuity of equal time. □ Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Which of the following is an example of an annuity? O An investment in a certificate of deposit (CD) O A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time
Gabe and Sarah would like to begin saving for their children's college education. They would like to know the amount of college funds that would be necessary on day one of college to pay for all tuition costs for each child. The current tuition at the university is $25,000. The couple is comfortable assuming an annual rate of return of 6% on their college investment savings program. They anticipate that each child will begin college at age 18 and attend for four years. The Consumer Price Index (CPI) is expected to be 3% and the expected college inflation rate is 5% per year.
On January 1, you plan to take a trip around the world upon graduation four years from now. Your grandmother wants to deposit sufficient funds for this trip in an investment account for you. On the basis of a budget, you estimate that the trip currently would cost $15,000. Being the generous and sweet lady she is, your grandmother decided to deposit $3,500 in the fund at the end of each of the next four years, starting on December 31, 2021. The account will earn 6 percent annual Interest, which will be added to the account at each year-end. (Future Value of $1. Present Value of $1. Future Value Annulty of $1. Present Value Annulty of $1, Financial Calculator) (Use tables, Excel, or a financial calculator.) Required: 1. How much money will you have for the trip at the end of year 4 (1.e., after four deposits)? 2. What is the total amount of Interest earned over the four years? 3. How much Interest revenue did the fund earn in each of the four years, starting in 2021? Complete this…
Sheldon Cooper and Amy Fowler are married and live in Pasadena, California. They have as a new investment goal to create a college fund for their newborn daughter. They estimate that they will need $195,000 in 18 years. Assuming that the Cooper-Fowler family could obtain a return of 5 percent, how much would they need to invest annually to reach their goal? Use Appendix A-3 or the Garman/Forgue companion website. Round your answer to the nearest dollar. Round Future Value of a Series of Equal Amounts in intermediate calculations to four decimal places.
Angela wants to take the next five years off work to travel around the world. She estimates her annual cash needs at $34,000 (if she needs more, she will work odd jobs). Angela believes she can invest her savings at 8% until she depletes her funds. (Click the icon to view Present Value of $1 table.) of $1 table.) (Click the icon to view Future Value of $1 table.) of $1 table.) Read the requirements. (Click the icon to view Present Value of Ordinary Annuity (Click the icon to view Future Value of Ordinary Annuity Requirement 1. How much money does Angela need now to fund her travels? (Round your answer to the nearest whole dollar.) With the 8% interest rate, Angela needs
Anita is looking forward to her retirement which is only five years away. Her retirement account did not accumulate as much as she had hoped. She decided to make some changes in her financial planning. Based on this information, which of the following statements is correct? At this stage, Anita should rebalance her funds in a way that maximizes her investment in growth stocks to accelerate her fund balance. At this stage, Anita should focus on preserving what she has accumulated and minimize all debt obligations. At this stage, Anita should borrow as much as possible and plan on making the payments with her social security earnings. At this stage, Anita should plan on extending her career, going on a diet, moving in with her children, and eliminating all recreational activities.
Elizabeth recently calculated her financial score. She was stunned to see how low it turned out to be. Undaunted, Elizabeth is determined to turn her financial situation around. To do this, she has set a financial goal to create an emergency savings fund. She can save $440 per month ($5,280 per year). She would like to accumulate $21.720 over the next 4 years. If Elizabeth can earn a 5% rate of return on her yearly savings, do you think she will accomplish her goal? (Round future value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 52.75.) Future value of an annuity Elizabeth accomplish her goal.
Susan and Joe would like you to help them adress spme of their financial goals. They would like to know if susan should finance or use the cash allowance option to buy her next car (2020 Chrysler 300). Currently, they are still paying for her car that they bought in January of 2016 (Chrysler 300, MSRP: $40,000, Interest Rate 4.13%, Length=5 years, down payment 4,000). Finance options MSRP:$39,595 Interest rate:0% length: 36 months Down payment required: 30% inflation: 3 % (Do not include residual value in calculations) Cash Allowance option: MSRP: $39.595 Cash Allowance: $3,500 Down payment required: 30% Length: 36 months Interest: 4% Inflation: 3% Current car loan: 1. How much are they paying for their current car loan (Monthly)? 2. How much do they Owe for their current loan (balance)? 3. How much interest have they paid for the life of the loan (From January, 2016 to April 1, 2020)? 4. How much principal have they paid for the life of the loan (from January, 2016 to April 1, 2020)?…
Mrs. John wants to take the next three years off work to travel around the world. She estimates herannual cash needs at $20,000. Mrs. John believes she can invest her savings at 10% until she depletesher funds. Table factor at 10% is 4.883 and at 7% is 4.152To find out how much she should invest now to fund her future cash flow if she invests at 10%. Or whatto invest if only earn 7 %.( Present value of annuity)
Billy Dan and Betty Lou were recently married and want to start saving for their dream home. They expect the house they want will cost approximately $255,000. They hope to be able to purchase the house for cash in 7 years. To determine the appropriate discount factor(s) using tables, click here to view Tables I. II. II. or IV in the appendix. Alternatively, if you calculate the discount factor(s) using a formula, round to six (6) decimal places before using the factor in the problem. Required a. How much will Billy Dan and Betty Lou have to invest each year to purchase their dream home at the end of 7 years? Assume an interest rate of 9 percent. b. Billy Dan's parents want to give the couple a substantial wedding gift for the purchase of their future home. How much must Billy Dan's parents give them now if they are to reach the desired amount of $255,000 in 9 years? Assume an interest rate of 9 percent. Complete this question by entering your answers in the tabs below. Required A…
(Click on the into a spreadsheet.) Annuity B C Premium paid today $24.098.32 $22,274.30 $31,240.13 $30,150.95 Annual benefit $3,200 $4100 $4,000 $4,200 Life (years) 20 10 15

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