James and Terry buy 100 shares of Verizon Stock. Over the last twenty years the stockhas increased 7% in value each year. Assuming the stock will continue to increase atthe same rate for the next twenty years.They buy $5000 in shares. How much will be inthe account after 20 years? Use the Formula B= Pe"

The future value of the cash flow is the future worth of a cash flow at a certain rate of interest…

Answered: James and Terry buy 100 shares of…

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

Franco plans to invest P1,500 in a mutual fund. If he earns 12% interest compounded monthly, to what amount will his investment grow in 20 years? No peso sign, with comma, no decimal point.
Suppose you are currently 18 years old, and you wish to retire at 58. You want to have $1,000,000 when you retire, and you believe the stock market will give you a return of 11% monthly. How much do you need to invest each month?
Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable quarterly. They will re-invest the dividends in a savings account which presently earnes 3% compounded yearly. They expect the stock will reach a selling price of $44000 in 4 years. Assume a regular income marginal tax rate of 43%, and a dividend marginal tax rate of 17.4 5%, and a capital gains marginal tax rate of 21.5%. What is the after-tax EAR of this tock? Assume taxation is paid annually for the interests and dividends.
A bank is offering to sell 6-month certificates of deposit for $12,000. At the end of 6 months, the bank will pay $13,000 to the certificate owner. Compute the nominal annual interest rate and the effective annual interest rate.
Benjamin wants to have $12,000 in 15 years after investing in an account that earns 4.2% compounded quarterly. How much should he invest?
A common stock priced at 78.56 dollars pays an annual dividend of $2.50 which is expected to grow indefinitely at 5% annually. What is its component cost of capital?
20
After graduating from Baruch, Amal plans on investing $8,000 every year beginning age 25 to age 65 (40 years). She plans on buying a Total US Stock Market Index fund and expects it will earn a “gross” 10% a year – in line with the historic return from US stocks. How much would her portfolio be worth at age 65 if her expense ratios was 0.05% Ans:
3
Mark saves a fixed percentage of his salary throughout each year. This year he saved $1500. For the next 5 years, he expects his salary to increase at an 8% annual rate, and he plans to increase his savings at the same 8% annual rate. He invests his money evenly twice a year in the stock market. There thus will be six midyear investments and six end of year investments. Solve the problem by using the geometric gradient factor. 2. How much will the investment be worth at the end of the six years if they increase in the stock market at a 8% annual rate? Select one: a. $12,911 b. $13,299 c. $13,224 d. $13,512
You received $2,500 at your graduation party and have decided to invest it in a stock index fund that earns 8% annually, but pays semi-annually. How much will you have 5 years from now?
"Amber recently inherited $510,000, which she immediately invested in an equity index mutual fund. If she plans to withdraw $2,000 per month from her account, what annual interest rate must she earn in order to have $128,000 left after 43 years? (Enter your answer as a whole number with two decimal places. For example, if your answer is 14.1025%, enter 14.10 as your answer)"

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