John Rebel opens a special investmentaccount for a major future business purchase.He plans to make uniform annual deposits forthe next 20 years in the account which isexpected to earn an annual nominal interestrate of 6% compounded monthly. If he wantsthe account to have $4,000,000 at the end ofthe 20 years, how much should he depositeach year?A.$353,600B.$108,800C.$106,800D.$348,800Suppose you start saving for retirement whenyou are 31 years old. You invest $5,200 thefirst year and increase this amount by 2%each year to match inflation for a total of 25years. The interest rate is 10% per year.1. How much will you have in accountimmediately after making the last deposit atage 55A. $587,686B. $55,158C. $597,616D. $810,8952. How much will you have, if the interest ratewas only 2% per year instead of 10%?A.$209,097B.$213,279C.$127,451D. $203,115

We have been given the accumulated amount at the end of 20 years, which is the future value of…

Answered: John Rebel opens a special investment…

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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Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to open a new restaurant, and your uncle offers to give you $120,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment? Select the correct answer. a. 8.41% b. 8.21% c. 8.51% d. 8.31% e. 8.61%
If you deposit $2,000 into an account at the end of each of the next 40 years, at 4.5% interest, how much will you have in the account, to the nearest $1,000, in 40 years? O $184,000 O $214,000 O $63,000 O $122,000 O $196,000
Payments of Ordinary Annuities Ryan wants to get together $40 000 to purchase the first house in his housing empire. He does the math, and he begins making regular quarterly deposits into a savings account that earns 8.5%, compounded quarterly, for 5 years. What must his regular deposits be in order to achieve his goal of saving $40 000 in 5 years?
K You have just received a windfall from an investment you made in a friend's business. She will be paying you $41,444 at the end of this year, $82,888 at the end of next year, and $124,332 at the end of the year after that (three years from today). The interest rate is 3.8% per year a. What is the present value of your windfall? b. What is the future value of your windfall in three years (on the date of the last payment)?
1. Attempt ALL questions Hugh is in his final year of study and forecast that it will cost $1,400,000 to cover tuition and boarding. He plans to finance 85% of the required amount with a 4-year loan from his local commercial bank. The loan is at a 16.5% annual rate and compounds monthly. 2. a) Using Excel, compute the monthly payment required to clear the loan within the projected period. b) Using Excel, prepare the amortization spreadsheet (show formulas). How much interest would Hugh have paid at the end of two and half c) years? d) What proportion of the 25th payment is interest? e) What is the effective rate being charged by the commercial bank? You are planning to buy a parcel of land costing $3,750,000. You have saved $1 250 000 as a down payment. You plan to borrow the balance from your building society at a rate of 13.5%, to be repaid annually over a 6-year period. The first payment is to be made immediately 3. a) Using Excel, compute the annual payment b) Using Excel, prepare…
1. You deposit GHS10,000 today into an account paying 6% annual interest and leave it on deposit for exactly eight years. Required: How much will be the amount in the account at the end of eight years if interest is compounded annually? 2. Imagine you are a professional personal finance planner. One of your clients ask you the following question. Use time value of money technique to develop appropriate responses in each question. I borrowed GHS75,000, am required to repay it in six equal (annual) end of year instalments of GHS3,344 and want to know what interest rate I am paying.
(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.)
Explain well both question with paper answer.
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19, Suppose starting this year you decide to make deposits of $5,000 at the end of each year for the next five years in a bank account paying 10% interest. If you currently have $3,000 in the account how much will you have at the end of five years? 1. $25,255.05 2. $36,742.22 3. $35,357.03 4. $30,272.35 5. $28,500.60
One of the categories of options available to investors and speculators is LEPOs. Assuming 7.00 per cent margin, what would be the percentage return and dollar profit to an investor who purchased one LEPO (for 1000 shares) for a premium of $26 220 and later closed out the position when the LEPO premium was $28 430?
Creating a retirement fund Personal Finance Problem To supplement your retirement, you estimate that you need to accumulate $220,000 exactly 45 years from today. You plan to make equal, end-of-year deposits into an account paying 8% annual interest. a. How large must the annual deposits be to create the $220,000 fund by the end of 45 years? b. If you can afford to deposit only $440 per year into the account, how much will you have accumulated in 45 years? (---) a. The annual deposits to create the $220,000 fund by the end of 45 years should be $. (Round to the nearest cent.)

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