At the end of each of the next 5 years, you will deposit the following amount into your savings account: Year Cash Flow $500 $600 2 3 $700 $900 $600 You expect interest rates to be higher in the future. Your best guess of what rates will be in the future is: Rate 1 year from now 10% Rate 2 years from now 11% Rate 3 years from now 12% Rate 4 years from now 13% If you forecast of interest rates is correct, how much money will you have 5 years from now? Hint: Find your balance at the end of each year. Round your answer to 2 decimal places, for example 100.12. 45

At the end of each of the next 5 years, you will deposit the following amount into your savings account: Year Cash Flow $500 $600 2 3 $700 $900 $600 You expect interest rates to be higher in the future. Your best guess of what rates will be in the future is: Rate 1 year from now 10% Rate 2 years from now 11% Rate 3 years from now 12% Rate 4 years from now 13% If you forecast of interest rates is correct, how much money will you have 5 years from now? Hint: Find your balance at the end of each year. Round your answer to 2 decimal places, for example 100.12. 45

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

Value of a retirement annuity. Your bank manager has informed you about a new investment plan that will provide you with $5,000 at the end of each of the next 20 years. If you have an opportunity to earn a guaranteed return of 6%, what is the most you would pay for this annuity right now?
Find the present worth sum of money that would be equivalent to the future amounts of $5000 in year 6 and $7000 in year 8 if the real interest rate is 10% per year and the inflation rate is 5% per year. Solve using the factors and their equations with (a) an inflation-adjusted rate, and (b) the real interest rate. Solve manually please
Suppose you deposit $9,000 into your bank account at the beginning of each of the next 5 years (i.e., the first deposit is today). If the interest rate is 9%, how much would you have accumulated at the end of 5 years?Enter your response below (rounded to 2 decimal places).
you have decided to begin saving for retirement. you will deposit $800 in a bank account today. than you will deposit an additional $800 every following year for 29 years (an annuity due). if your bank pays 3.73% interest, how much will you accumulate in the account at the end of 30 years
K Suppose you receive $500 at the end of each year for the next three years. a. If the interest rate is 7%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 7% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. The present value of the cash flow is $ (Round to the nearest cent)
You are planning to put $1,060 in the bank at the end of each year for the next three years in hopes that you will have enough money for a newest LCD model that is available. If you are investing at an annual interest rate of 12%, you'll have accumulated at the end of three years. How would you plug this into a BA II calculator?
(Future value) If you deposit $3,500 today into an account earning an annual rate of return of 11 percent, what would your account be worth in 35 years (assuming no further deposits)? In 40 years? a. If you deposit $3,500 today into an account earning an annual rate of return of 11 percent, what would your account be worth in 35 years? What would your account be worth in 40 years?
Review the compound interest formulas for n compoundings per year and for continuous compounding we learned this week. Do a quick check of the various interest offering from your favorite bank and then design a saving plan that would give you the most satisfactory savings in at the end of 2030 if you have only 5 extra dollars to be put away every day? interest rate =0.5%
Suppose that the parents of a young child decide to make annual deposits into a savings account, with the first deposit being made on the child’s fifth birthday and the last deposit being made on the 15th birthday. Then, starting on the child’s 18th birthday, the withdrawals as shown will be made. If the effective annual interest rate is 8% during this period of time, what are the annual deposits in years 5 through 15? Use a uniform gradient amount (G) in your solution. (See shown figure )
Use future value and present value calculations (an online calculator, app, financial calculator, or spreadsheet software) to determine the following: Use Exhibit 1-A, Exhibit 1-B and Exhibit 1-C. a. The future value of a $710 savings deposit after nine years at an annual interest rate of 8 percent. Note: Round FV factor to 3 decimal places and final answer to nearest whole dollar. b. The future value of saving $3,200 a year for three years at an annual interest rate of 7 percent. Note: Round discount factor to 3 decimal places and final answer to nearest whole dollar. c. The present value of a $3,400 savings account that will earn 4 percent interest for six years. Note: Round PV factor to 3 decimal places and final answer to nearest whole dollar. a. Future value b. Future value c. Present value
You will receive $1000 from a savings bond in3 years from now. The nominal interest rate is 8% and the rate of inflation is 2%. What is the real value of the $1000 that you receive 3 years from now in terms of today's dollars?
If you are expecting to get OMR 10240 at the end of 3 years. Calculate its present value if the interest rate is 9.42% and is computed quarterly. Select one: a. 3344.46 b. 7744.46 c. 6644.46 d. 2244.46 If you deposit OMR 27177 in your account in a bank. Suppose the bank pays 12% compound interest quarterly. Calculate value of your money in 4 years Select one: a. 166607.80 b. 43611.11 c. 16935.81 d. 42749.42 e. All the given choices in this question are not correct The company has made an investment in government bonds. The bonds will generate an interest income of OMR 20661 each year for 6 years. The interest rate is 12% annually. Compute present value of the stream of interest income for 6 years. Select one: a. 64284.79 b. All the given choices in this question are not correct c. 105606.79 d. 84945.79 e. 5025.29 Abdullah deposits OMR 23422 at the end of every year for 4 years and the deposit earns a compound interest of 3% per annum. Calculate the amount at the end of…

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