Jane Doe plans to make twelve end-of-month payments of $18,000 each on a short term investment account. The accou earns a monthly interest rate of 2.5%. a. What is the present worth (i.e., Po) of these payments? b. Repeat Part (a) but assuming that they are beginning-of-month payments.

Jane Doe plans to make twelve end-of-month payments of $18,000 each on a short term investment account. The accou earns a monthly interest rate of 2.5%. a. What is the present worth (i.e., Po) of these payments? b. Repeat Part (a) but assuming that they are beginning-of-month payments.

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

See similar textbooks

Related questions

Q: A cash loan is to be repaid by paying $13,500 at the beginning of every month for 3 years. If…

A: Here, Monthly payment = $13,500 Number of years = 3 years Interest rate = 12% Payment at the…

Q: Consider a loan of 1,000,000 which is to be amortized by 60 monthly payments. The interest rate is…

A: Loan (mortgage) amortization schedule refers to a schedule which is prepared to shows the periodic…

Q: We will use Excel PMT function to calculate the payment Rand then create an amortization schedule…

A: PMT function in excel is used to calculate the amount of payment received or paid by the individual.…

Q: Assume that you can get a loan from NCB for $264,500 for three years to buy an item of your…

A: Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a sum…

Q: month. The certain annuity is 325038 PLN and nominal interest rate is 12%. Prepare the amortization…

A: Annuity Payment to be received at the beginning of each month Annuity amount 325038…

Q: You borrow $11,000 from the bank at an interest rate of 6%, compounded annually. You are required to…

A: Compound interest is interest added to the principal amount of a loan or deposit, or interest on…

Q: You own the right to receive a sequence of payments. The first payment is $4000 and is received…

A: A stream of cash flows in perpetuity has been provided. The present value needs to be determined.…

Q: You have approached your bank for a 30 year mortage loan in the sum of $2,160,000. The bank has…

A: Monthly payments refers to the periodic payment of repayment of a loan. Monthly payments includes…

Q: Use technology to complete parts (a) through (c) below. a. Find the monthly payment for a loan of…

A: Loan amount (PV) = $ 5000 APR = 12% Monthly interest rate (r) = 12%/12 = 1% Term = 20 Years Number…

Q: Assume you graduate from university with a $37,000 student loan. If your interest rate is fixed at…

A: The monthly payment amount can be calculated with the help of present value of annuity function.…

Q: GHA Co. made an investment of $10,000 and from this it will receive $800 annually for the next 18…

A: The present value of the annuity factor is used when there is an equal series of cash flows and the…

Q: monthly payment amount be

A: An annuity is the regular payment of an amount at an equal interval. It is a payment of a fixed…

Q: Show your financial calculator inputs for the payment calculation.

A: Interest refers to the cost of money borrowed from a lender. It can be simple or compound. It is…

Q: A basic ARM is made for $217,000 at an initial interest rate of 6 percent for 30 years with an…

A: A loan agreement is a legal document that outlines the terms and conditions of a loan between a…

Q: A loan of $10,000 today is to be repaid by annual payments of $800 to commence one year from now and…

A: Final payment:The "final payment" represents the concluding installment in a series of financial…

Q: Using the simple interest method, find the monthly payments on a $2,000 installment loan if the…

A: Simple interest refers to the method of interest calculation where the principal amount remains the…

Q: An apartment unit in a rural area that sells for P1,800,000 can be purchased under terms requiring…

A: Price of apartment (PV) = P1,800,000 Number of monthly payments (n) = 200 Interest rate = 12%…

Q: Consider a loan of $98,000 at 7% compounded annually, with 12 annual payments. Find the following.…

A: Loan amortization can be defined as the procedure of amortizing the loan in such a way that the loan…

Q: Assume that you want to buy a house and have to borrow $80.000 over a term of 25 years. The annual…

Q: A house costs $144,000. It is to be paid off in exactly ten years, with monthly payments of…

A: The Annual Percentage Rate(APR) of the loan can be calculated using the RATE function in Excel.

Q: The interest rate on a $6400 loan is 7% compounded semi-annually, and the loan is to be repaid by…

A: Here, To Find: Number of months required to settle the loan =? Amortization schedule =? Total…

Q: A $17000 loan is to repaid by monthly payments of $390, the first payment is due in one year's time.…

A: given, pv = $17000 pmt = $390 r=10% m=12

Q: Goliath Banking Corporation (GBC) offers an "Income Investment Product" (IIP) for customers. The…

A: Return promised shall be calculated with the help of financial calculator. (a) Price = Annual…

Q: Suppose that you borrow $10,000 from a bank to purchase a car. You agree with the bank to repay the…

A: Given: Particulars Amount Loan $10,000 Interest rate 16% Years 1

Q: uppose that one has a bank loan for P15,584.48, which is to be repaid in equal end-of-month…

A: In this we need to calculate present value factor and from that you will get monthly payment.

Q: An investment promises two payments of 650 on dates two and four months from today if the required…

A: The present value is the current value of future cash flows. Investors and money lenders use this…

Q: borrowed Php200,000 from a local bank having an interest of 8% per annum, compounded monthly. If the…

A: Loans are to be paid by the equated monthly payments which carry the payment of principal and…

Q: A house costs $142,000. It is to be paid off in exactly ten years, with monthly payments of…

A: Annual Percentage Rate(APR) is nothing but the rate of interest charged to borrower and it will be…

Q: Consider a student loan of $25,000 at a fixed AP a. Calculate the monthly payment. b. Determine the…

A: Loan amount = $25,000Interest rate = 9%Number of years = 30 years

Q: Basic ARM is made for $250,000 at an initial interest rate of 6 percent for 30 years with annual…

A: Initial amount of loan = $250,000Interest rate for : Year 1 = 6% & Year 2 onwards = 7%Period =…

Q: A computer is being sold for RM5,000 cash. Through an instalment purchase, the purchaser has to pay…

A: Reducing balance method means that interest is charged on the principal amount of loan outstanding…

Q: 5. A loan of $12,000 is to be repaid by three equal payments due today, two months from now, and one…

A: Borrowings are the liability that is used to finance the requirement of the funds. The borrower…

Q: Example: You will receive three payments: $1,000, $2,000 and $3,000 on March 1, May 1 and December 1…

A: Due Date Amount receivedMarch 1 Amount received on March 1=$1,000May 1 Amount received on May…

Q: cond year. The size of the equal payment needed each year is GHS

A: Information Provided: Loan amount = 200,000 Interest rate = 18% Number of Annual periods = 6

Q: Van Buren Resources Inc. is considering borrowing $120,000 for 168 days from its bank. Van Buren…

A: Financing Costs: Financing costs is nothing but an interest cost that a company would incur for…

Question

Jane Doe plans to make twelve end-of-month payments of
$18,000 each on a short term investment account. The account
earns a monthly interest rate of 2.5%.
a. What is the present worth (i.e., Po) of these payments?
b. Repeat Part (a) but assuming that they are
beginning-of-month payments.
a. The present equivalent of the payments is $
nearest dollar.)
b. The present equivalent of the payments is $
nearest dollar.)
(Round to the
(Round to the

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Calculation of present value

VIEW

Step 3: Calculation of present value of annuity

VIEW

Solution

VIEW

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

16. You borrow $27,000 to purchase a plane. The loan will be paid in monthly installments over one year at 30% interest annually. The first payment is due one month from today. What is the amount of each monthly payment? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Consider a student loan of $25,000 at a fixed APR of 12% for 20 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. a. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
Excellent bank has offered you, a GHC 60,000 35year loan to purchase an equipment in your Factory. The loan payments are to be made on monthly basis. The total payment at the end of the thirty five -year period is GHC 134,964.00. Determine the effective annual interest rate if the interest is compounded continuously.
You have obtained a loan from the bank for $50,000 at 11.0% compounded quarterly. You will have the loan paid off in 15 years. Your quarterly payment will be $1,900.00. 1. a) Label the amortization schedule (in words not symbols b) Construct a partial amortization schedule showing the details of the first payment
A 5-year loan is to be repaid by month-end repayments of 7,000 starting in one month at an interest rate of 1.2% p.a. compounded monthly. Or, it can be repaid by year-end repayments of $X staring in one year. Calculate the yearly repayments $X. Correct your answer to the nearest cent without any units. (Do not use "$" or "," in your answer. e.g. 12345.67)
Bank A pays 6% simple interest annually on its investment accounts. If Bank B pays interest on its account compounded semiannually, what is the annual percentage rate (APR) should the bank set if it wants to match Bank A over an investment horizon of 10 years?
Find the amount of the payment necessary to amortize a loan of $32,000 at 4% compounded quarterly in 15 payments. Use TVM solver in calculator
Excellent bank has offered you $40,000, 30-year loan to purchase an equipment in your Factory. The loan payments are to be made on monthly basis. If the total payment at the end of the thirty-year period is $134964.00. Determine the effective annual interest rate if the interest is compounded monthly
Please answer
PLEASE DO THE FOLLOWING ON AN EXCEL SPREADSHEET: Consider a loan of $1,000,000 with the nominal annual interest rate of 10% compounded annually that must be paid off in 15 years. The loan fees include 2.0 points plus originating fee of $1,000. Calculate the loan monthly installments and APR of the loan.
A loan taken from Riyadh Bank; needs to be paid off, in N years. If the loan is equal to 40 identical installment payments, calculate N. ASSume the Annual interest rate is 0.6 %.
A house costs $147,000. It is to be paid off in exactly ten years, with monthly payments of $1,783.52. What is the APR of this loan? A. 6% B. 8% C. 7% D. 9% Please use BA II where applicable.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS