(Comprehensive problem) You would like to have $60,000 in 16 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 $15,000 and deposit this in the bank toward your goal of $60,000 at the end of year 16. 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.)

(Comprehensive problem) You would like to have $60,000 in 16 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 $15,000 and deposit this in the bank toward your goal of $60,000 at the end of year 16. 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.)

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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(Comprehensive problem) You would like to have $54,000 in 16 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 6 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 6 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 $54,000 at the end of year 16. 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 6 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 $550,000 when you retire in 40 years. How much should you invest each quarter if you can earn a rate of 3.6% compounded quarterly?a) How much should you deposit each quarter?b) How much total money will you put into the account?c) How much total interest will you earn?
(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?
Suppose you want to save $220,000 for retirement. You will do so by putting monthly deposits into an account that gets 5% interest compounded monthly for 30 years. What should your monthly deposits be? Round your answer to the nearest cent and include units. Make sure you show the formula you used and the values you filled in.
You believe you will spend $47,000 a year for 13 years once you retire in 26 years. If the interest rate is 7% per year, how much must you save each year until retirement to meet your retirement goal? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Annual savings
How much do you have to deposit today so that beginning 11 years from now you can withdraw $12,000 a year for the next 6 years (periods 11 through 16) plus an additional amount of $24,000 in the last year (period 16)? Assume an interest rate of 9 percent.
Retirement Investment Advisors Incorporated, has just offered you an annual interest rate of 6 percent until you retire in 40 years. You believe that interest rates will increase over the next year and you would be offered 6.6 percent per year one year from today. If you plan to deposit $18,000 into the account either this year or next year, how much more will you have when you retire if you wait one year to make your deposit?
You plan to buy property in Florida 8 years from today. To do this, you estimate that you will need $ 45000 at that time for the purchase. You would like to accumulate these funds by making equal annual deposits into your savings account, which pays 9% annually. If you make your first deposit at the end ofthis year, and you would like your accountto reach$ 45000 when the final deposit is made, what amount do you need to deposit annually?
Use the following to answer the next two questions: You decide to be in saving for your retirement days. You begin with depositing $300 per month into a savings account that is earning 12% per year compounded monthly. You may deposit faithfully for 25 years at which time you'll retire. Your institution wants to keep your money and as an incentive begins paying 15% per year compounded monthly provided your delay, taking out any money for four years. After four years, you decide to begin withdrawing equal payments for the next 20 years. What are the equal monthly payments that you can withdraw if you want the account to last for 20 years?
Starting next year, you will need $15,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $15,000.) Your uncle deposits an amount today in a bank paying 5% annual interest, which will provide the needed $15,000 payments. How large must the deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $ 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. $
13) You take out a loan for $75,000 for 12 years at 6% monthly. What is the payment? a) how much interest is paid for the entire loan? b) If you pay an extra $100 per month, how many payments will it take to pay off the loan? c) If you pay an extra $100 per month, how much interest will be saved?
Suppose you want to buy a vacant lot for your future home for $29,673. If your bank is willing to loan you the money at a 6% APR over the next 14 years how much would be your monthly payment? (Round up your answer to two decimal point)

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