John borrowed P4500 cash from his friend. His friend's condition is that hemust pay his debt in 2 years with an interest of 3% one time payment only.However, john plans to set aside an amount of money in his piggy bank every3months with an interest of 4% compounded quarterly until he canaccumulate the total debt and pay it one time to his friend. How much moneymust John set aside every 3months?

Periodic payment can be calculated using the future value of annuity. First we need to calculate the…

Answered: John borrowed P4500 cash from his…

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

Heather deposited $1, 700 at her local credit union in a savings account at the rate of 9.8% paid as simple interest. She will earn interest once a year for the next 13 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Heather in 13 years?
Franklin owes the following amounts to the same person: $16,000 due today, $11,500 due in 1¼ years, $17,000 due in 2¾ years, and $15,000 due in 4¼ years. He wants to make a single payment of $56,500 instead. Using an interest rate of 8% compounded quarterly, when should this payment be made?
John won a lottery. After taxes, he was able to take home his winnings worth $510000. He decides to deposit 20% of this in a separate savings account for retirement. If the savings account has a nominal interest rate of 7%, compounded monthly, how much will be in the account if he retires in 35 years?
4. Richard makes payments of $400 into a savings account each month. The account gains interest at a rate of 4.2% compounded monthly. 20 years later, he takes his money out of this account and places it in an account that gains continuously compounded interest at a rate of 4.0%. At this point, he is no longer making additional payments. (a) How much money is in his account at the end of the first 20 year period? (b) How much money is in his account 15 years after moving his money to the second account? (c) Use Desmos to draw a graph showing how his money growth over the full 35 year period.
An investor deposits $100 into his credit union account that pays interest at the rate of 3.25% per year (payable at the end of each year). He leaves the money and all accrued interest in the account for 7 years. How much will he have at the end of the 7 years?
Nick borrowed $6000 for 24 months from his bank using an 11 and a 1/2 percent discount note. A. How much interest did Nick pay the bank for the use of the money? B. How much did he receive from the bank?
Bob wants to deposit $5000 into a bank account at the beginning of the next month and $200 per month into that same account at the end of that month and each subsequent month for the next 5 years. If the bank pays interest at the rate of 3% per year compounded monthly, how much will Bod have in his account at the end of 5 years? Assume that he makes no withdrawals during the 5 year period.
Douglas needs to borrow $15,600 today for his tuition bill. He agrees to pay back the loan in a lump-sum payment five years from now, after he is out of college. He bank states that the payment will need to be $19, 683. If Douglas borrows the $15,600 from the bank, what interest rate is he paying on his loan?
Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?
In December 2018, Eric puts $1600 into a bank account. He then deposits an additional $1000 each year thereafter. The account earns 4% interest, compounded annually. When Eric has a total of at least $50,000 in his account at the beginning of a year he will buy a house. In what year will this happen?
Kim borrowed money from a bank to buy a fishing boat. He took out a personal, amortized loan for $18,500 , at an interest rate of 5.9%, with monthly payments for a term of 6 years Find Joe's monthly payment. (b) If Joe pays the monthly payment each month for the full term, find his total amount to repay the loan. (c) If Joe pays the monthly payment each month for the full term, find the total amount of interest he will pay. Please answer all subparts with explanation. I will really upvote. Thanks
Molly deposits $2,500 in her checking account today. Her checking account pays interest of 2.5% compounded annually. Assuming Molly does not withdraw any funds and does not deposit any additional funds, how much will be in her account in 23 years?

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