K(Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated $12,000 at the end of9 years. To do this, you plan on depositing an equal amount into the bank at the end of each year. If the bank is willingto pay 8 percent compounded annually, how much must you deposit each year to reach your goal?To reach your goal, your annual deposit must be $ (Round to the nearest cent.)Show workN

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Answered: K (Solving for PMT of an annuity) To…

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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You would like to have $59,000 in 5 years for the down payment on a new house following graduation by making deposits at the end of every three months in an annuity that pays 4.25% compounded quarterly. (a) How much should you deposit at the end of every three months? (b) How much of the $59,000 comes from deposits? (c) How much of the $59,000 comes from interest? (Round UP to the nearest dollar. For example, $247) () af
You deposit $1.2 million into your account to cover expenses in the next 12 years. The account earns interest at the rate of 4%, compounded annually. Assume you expect the balance of the account to be $0 at the end of the 12th year. a) What annual level of living expenses will your initial deposit support? (e.g., what equal annual withdrawal can you make for the next 12 years)? b) Suppose you realize your living expenses will increase at an annual rate of 2% due to inflation. Determine the updated annual spending plan in line with this model: how much can you withdrawal at the end of the first year, knowing that your withdrawal will increase by 2% each year? c) Suppose the initial deposit is still planned to support your equal annual expenses in the next 10 years as in part a), but don't need to withdraw any money from your account for the first 6 years. You will withdraw from your account annually starting from the end of year 7 till the end of year 12. What annual level of living…
Ques 11 and 12
Without using Excel and using the formula, Cheryl is setting up a payout annuity and wishes to receive $1200 per month for 20 years. A. How much does she have to deposit if her money earns 8% interest compounded monthly? B. Find the total amount Cheryl will receive from her payout annuity.
(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.)
Question - : Your child is going to college for the next 4 years. You are setting up a college fund that your child withdraws from at the BEGINNING of each 6 month period (2 withdrawls each year). Each withdrawl is $ 3000. The account pays 12% annual interest rate, compounded 2 times a year. How much money should you put in the account now?
What lump sum do parents need to deposit in an account earning 10%, compounded monthly, so that it will grow to $70,000 for their son's college fund in 13 years? (Round your answer to the nearest cent.) $
You would like to have $37,000 in 5 years for the down payment on a new house following college graduation by making deposits at the end of every three months in an annuity that pays 4.25% compounded quarterly. How much should you deposit at the end of every three months? How much of the $37,000 comes from deposits and how much comes from interest?
3. Use the annuity formula to calculate the future value of an annuity where you deposit $50 into an account gaining 5% interest for 3 years. Assume monthly deposits. Write out the formula first to show your work.
(Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated $19,000 at the end of 11 years. To do this you plan on depositing an ←equal amount into the bank at the end of each year. If the bank is willing to pay 15 percent compounded annually, how much must you deposit each year to reach your goal? To reach your goal, your annual deposit must be $ (Round to the nearest cent.)
Can you help me work out this problem in detail? Ben wants to receive $6,000 a year for 10 years. How much must he invest today in an annuity that pays 7% annually?
Suppose that you take out an unsubsidized Stafford loan on September 1 before your junior year for $45004500 and plan to begin paying it back on December 1 after graduation and grace period 27 months later. The interest rate is 6.8%. How much of what you will owe will be interest?$Round your answer to the nearest cent.

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