**Future value with periodic rates.**Denise has her heart set on being a millionaire. She decides that at the end of every year, she will put away $4,800 into her "I want to be a millionaire account" at her local bank. She expects to earn 6.5% annually on her account.a. How many years must Denise faithfully put away her money to succeed at becoming a millionaire?b. If Denise switches to a monthly savings plan and puts one-twelfth of the $4,800 away each month ($400), how much will she have in 43 years at the 6.5% APR?c. Why is the future value under the monthly savings plan more than the $1,000,000 goal?

Given information : Target value $1,000,000 Yearly deposits $4,800 Interest rate 6.50%…

Answered: Future value with periodic rates.…

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

Tala McLouf, a 21-year-old BBA graduate, likes to plan for her future ahead, and would like to save $47.50 every week for her retirement later on. At the end of each year, Tala would invest her total accumulated savings into an account at the local credit union paying her a yearly interest rate of 8.25%. How much money will Tala be able to save per year? How much money will Tala have saved when she reaches 55 years old? How much would Tala have saved by the time she is 60 years old, if she starts investing for her retirement at the age of 40 after paying off the mortgage for her house in Los Angeles? Even if Tala starts saving at 40, she would still like to have the same amount of money in her account when she is 60 as she would have had, had she started saving back when she was 21.
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?
Tom plans to save $92 a month, starting today, for 18 years. Dick plans to save $92 a month for 18 years, starting one month from today. Both Tom and Dick expect to earn an average return of 5.4 percent APR on their savings and both will make the same number of deposits. At the end of the 18 years, how much more (in $) will Tom have than Dick? Answer to two decimals.
Aurora is looking to retire but is hesitant as she is unsure of how long her savings will last throughout her retirement. To date, she has saved $70,000 and wishes to receive $600 a month for spending money. At an interest rate of 6%, compounded monthly, how many months will her money last? Select one: a. 270 months b. 243 months c. 173 months d. 183 months e. 176 months
Julieta and Eric are purchasing a home. They wish to save money for 12 years and purchase a house that has a value of $170,000 with cash. If they deposit money into an account paying 7 % interest, compounded monthly, how much do they need to deposit each month in order to make the purchase? Round your answer to the nearest cent, if necessary.
Future value. Jack and Jill are saving for a rainy day and decide to put $40 away in their local bank every year for the next 20 years. The local Up-the-Hill Bank will pay them 6% on their account. a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of 20 years? b. Unfortunately, Jack had an accident in which he sustained head injuries after only 10 years of savings. The medical bill has come to $400. Is there enough in the rainy-day fund to cover it? a. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of 20 years? $nothing (Round to the nearest cent.)
What payment every year should Carie deposit to her savings account in order to save $37,100 in 11.5 years if money can earn 3.19% compounded annually?
An individual (with log-utility) wants to maximize her happiness level over her adolescence and adult periods. At the age 18 the individual inherits one hundred thousand dollars and must decide how much to consume now (when she is young, period t) and how much to save for her adulthood (period t +1) to maximize the sum of utility over different life stages. The bank will pay interest rate of 5% of every dollar she deposits. The individual discounts future utilities at ß = 0.8. What is the optimal consumption in the adolescent period? 55555.56 55561.55 55558.55 55564.56

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