Bradley Snap has deposited $7 000 in a guaranteedinvestment account with a promised rate of 6%compounded annually. He plans to leave it there for 4full years when he will make a down payment on acar after graduation. How much of a down paymentwill he be able to make?A $8 960.00B) $2 175.57C) $8 837.5D) $30 622.2

concept. Future value = A ( 1+r )n where , A= amount deposited r= interest rate n= time period.

Answered: Bradley Snap has deposited $7 000 in a…

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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12 A college student wants to celebrate graduating and getting a job by spending $5,000 on a trip to Bali with his wife. He applies for and subsequently gets a “vacation loan” of $4,000 from UNO FCU. The bank offers an interest rate of 11% per year and the loan must be repaid in 5 equal annual payments. Construct his loan amortization schedule.
Payments of Ordinary Annuities Ryan wants to get together $40 000 to purchase the first house in his housing empire. He does the math, and he begins making regular quarterly deposits into a savings account that earns 8.5%, compounded quarterly, for 5 years. What must his regular deposits be in order to achieve his goal of saving $40 000 in 5 years?
You have a unique account in your local bank If you deposit $7,000 today, the bank will pay you an annual interest rate of 5.5 percent for 4 years, 6.5 percent for 3 years, and 7 percent for 7 years How much will you have in your account is 14 years? Answer is: Dollars
You need P50,000 per year for four years to go to college. Your father invested P16300 per year in a 10.163% account for your education starting from the year you were born until you were 18. If you withdraw the P50,000 at the end of your 19th, 20th, 21st, and 22nd years to aid you in your college years, how much money will be left in the account at the end of your last withdrawal?
You decide to purchase your own property. The estimated purchase price is $1,600,000. You obtain 90% financing from the bank, 7% fixed rate for 25 years. How much do they have to pay the bank every year? How much do you still owe the bank in 14 years?
2. Ms. Pan Aram has set the goal of accumulating Php 4,000,000 for her son's college fund, which will be needed 18 years in the future. Her investment agent advises her that she can deposit today to Bank X that earns 8% annual interest. a. Option A: How much she needs to deposit today in the bank? b. Option B: If she will be depositing an equal payment of Php 107,000 per year for 18 years at 8% annual interest, how much is the future value? c. Which is the better option Ms. Pan should decide? Why?
Ryan has always dreamed of opening a cafe by the seaside. He decides he will save to help open the cafe by depositing money and in order ordinary annuity that earned 7.8% interest, compounded annually. Deposits will be made at the end of the year. How much money will he need to deposit into the annuity each year for the annuity to have a total value of $24,000 after 8 years?
Amr Al Kaitoob wants to buy the house in 3 years (at end of Year 3) and he is currently saving for down payment. He plans to save $5,000 at the end of the first year (at end of Year 1). Amr anticipates his annual savings will increase by 10% annually thereafter. His expected annual return is 7%. Calculate the amount of money that Amr will have for the down payment at the end of Year 3.
You are doing a special project for the boss and he is going to give you a $5,000 bonus when it is completed in 3 years. In the meantime, you and your partner are having a baby this year. You intend to put your bonus into a 6% investment and let it accumulate until the baby is 18 years old when you will withdraw the total amount for college expenses. How much will the fund be at the end of 18 years? O $11,983 O $116,380 O $154,503 O $179,742
a. In the next five years, Jerome is planning to buy a specialized piece of machinery to replace the old one in his restaurant. He estimates that the machine would cost $250 000. Given that the existing interest rate is 8 %how much money should he invest now? b. He has an option to invest in a fixed deposit account at an interest rate of 10%How much should he invest at the beginning of each year for the next five (5) years in order to achieve his goal? c. If the interest rate increases from 10% to 12%, by how much would the annual investment in part (b) above change ? d. You inherited $ 6,000 from your grandfather . You want to buy a piece of equipment costing $ 7,000 two years from now . Will you have enough money to buy the equipment if you deposit this money in an account paying 8 % compounded semi -annually ?
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?

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