question 15 (Comprehensive problem) You would like to have $57,000 in 12 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 10 percent interest compounded annually. Your first payment will be made at the end of the year.a. How much must you deposit annually to accumulate this amount?b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 10 percent on this deposit.)c. At the end of five years, you will receive $20,000 and deposit this in the bank toward your goal of $57,000 at the end of year 12. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 10percent on your deposits.)

Result: The annual deposit needed is $2,665.51. Part (b): Lump-Sum Deposit Instead of Annual…

Answered: (Comprehensive problem) You would like…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 34P: You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make...

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Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, with the first occurring today. The bank pays 8% interest, compounded annually. You expect to receive annual raises of 3%, which will offset inflation, and you will let the amount you deposit each year also grow by 3% (i.e., your second deposit will be 3% greater than your first, the third will be 3% greater than the second, etc.). How much must your first deposit be if you are to meet your goal?
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
(Comprehensive problem) You would like to have $52,000 in 15 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 8 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 8 percent on this deposit.) c. At the end of five years, you will receive $15,000 and deposit this in the bank toward your goal of $52,000 at the end of year 15. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 8 percent on your deposits.) * a. How much must you deposit annually to accumulate this amount? $(Round to the nearest cent.) b. If you decide to make a large lump-sum deposit today instead of the annual…
(Comprehensive problem) You would like to have $52,000 in 12 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 10 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 10 percent on this deposit.) c. At the end of five years, you will receive $20,000 and deposit this in the bank toward your goal of $52,000 at the end of year 12. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 10 percent on your deposits.) a. How much must you deposit annually to accumulate this amount? $(Round to the nearest cent.) b. If you decide to make a large lump-sum deposit today instead of the annual…
(Comprehensive problem) You would like to have $59,000 in 15 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 9 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn percent on this deposit.) c. At the end of five years, you will receive $20,000 and deposit this in the bank toward your goal of $59,000 at the end of year 15. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 9 percent on your deposits.) a. How much must you deposit annually to accumulate this amount? C
(Comprehensive problem) You would like to have $58,000 in 15 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 8 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 8 percent on this deposit.) c. At the end of five years, you will receive $20,000 and deposit this in the bank toward your goal of $58,000 at the end of year 15. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 8 percent on your deposits.) a. How much must you deposit annually to accumulate this amount? (Round to the nearest cent.) b. If you decide to make a large lump-sum deposit today instead of the annual…
(Comprehensive problem) You would like to have $57,000 in 13 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 8 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 8 percent on this deposit.) c. At the end of five years, you will receive $15,000 and deposit this in the bank toward your goal of $57,000 at the end of year 13. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 8 percent on your deposits.) a. How much must you deposit annually to accumulate this amount? (Round to the nearest cent.)
You would like to have $ 59,000 in 15 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 9 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 9 percent on this deposit.) c. At the end of five years, you will receive $ 10,000 and deposit this in the bank toward your goal of $ 59,000 at the end of year 15. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 9 percent on your deposits.) Question content area bottom Part 1 a. How much must you deposit annually to accumulate this amount? $ enter your response here…

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