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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Similar questions

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 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?
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.
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?
Determine whether each scenario below is a savings/investments question or a loans question. 1. Sabrina finances a $21,999 car at 4.25% APR over 5 years. If she makes a down payment for $5,000, how much will she end up paying in interest for the car? 2. Alejandro deposits $1,500 into an investment account with an APR of 2.25% compounded monthly. How much does Alejandro need to put into his account each month in order to have $5,000 in 3 years to purchase a car in cash? 3. Amy wants to buy a house for $150,000. She doesn't have enough yet for a 20% down payment. If she puts $2,000 into the account now and $500 every month, how long will it take for her to have enough for a 20% down payment to buy this house? 4. Arnie paid $500 for his $1,200 laptop. If he finances the rest at 6.75% over 24 months, how much money will he end up paying in total for this laptop?
Greg has always dreamed of opening a café by the seaside. He decides he will save to help open the café by depositing money in an ordinary annuity that ea 7.8% interest, compounded monthly. Deposits will be made at the end of each month. How much money will he need to deposit into the annuity each month for the annuity to have a total value of $24,000 after 8 years? Do not round intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
Your parents are giving you $270 a month for 4 years while you are in college. At an annual interest rate of 7.32 percent, what are these payments worth to you when you first start college? $10,645.37 $11,004.00 $11,205.65 $15,004.18 $10,832.13
Starting next year, you will need $5,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $5,000.) Your uncle deposits an amount today in a bank paying 7% annual interest, which will provide the needed $5,000 payments. How large must the deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much will be in the account immediately after you make the first withdrawal? Do not round intermediate calculations. Round your answer to the nearest cent.
Abby Ellen wants to attend Ithaca College. She will need $75,000 6 years from today. Assume Abby's bank pays 6% interest compounded semi-annually. What must Abby deposit today to have $75,000 in 6 years?

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