Kevin deposits $10,000 at the beginning of each year for ten years, into a financial instrument offering dividend rate of 10% per year. He then withdraws annualized level payments of P starting at the beginning of eleventh year and continuing for 15 years later, at dividend rate of 5% per year. At the end of 25 years, the fund balance remains zero. a. Calculate the present value of the annualized deposits he makes. b. Calculate the annualized level payment of withdraw, P. c. Determine the balance of the fund at the end of 15 years starting from the year he makes his first deposit, just before the next sixth withdraw is being made.

Kevin deposits $10,000 at the beginning of each year for ten years, into a financial instrument offering dividend rate of 10% per year. He then withdraws annualized level payments of P starting at the beginning of eleventh year and continuing for 15 years later, at dividend rate of 5% per year. At the end of 25 years, the fund balance remains zero. a. Calculate the present value of the annualized deposits he makes. b. Calculate the annualized level payment of withdraw, P. c. Determine the balance of the fund at the end of 15 years starting from the year he makes his first deposit, just before the next sixth withdraw is being made.

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

Similar questions

Slick Sam has a special relationship with his banker. The nature of the relationship is as follows: • The bank owes Sam $100 per year forever. The 1st payment is due in 1 year. • The bank will borrow or lend money to Sam at a constant effective rate of i per year. Today, Sam calculated the present value of the payments that are due to him as X. Sam can receive his first 16 payments at the end of year 16 in a lump sum. If he does that, then the total value of the lump sum and future payments at the end of the sixteenth year is X + 2,000. Calculate X. A B с D E 3,330 3,350 3,400 3,450 3,500
Bob has deposited $10,000 at the end of each year into a saving account for the last 12 years. His deposits earned interest at 4% for the first 4 years; at 5% for the next 3 years; and at 6% for the last 5 years. (a) What is the accumulated value in his saving account at the end of year 4? (b) What is the accumulated value in his saving account at the end of year 7? (c) What is the accumulated value in his saving account at the end of year 12? (d) What is the total interest earned for the 12 years?
At the start of the year, Piotr has an investment fund worth $30,000.00. 4 months later the fund is worth $30,750.00 and Piotr deposits another $3,000.00. 4 months after that, the fund is worth $34,425.00 and Piotr withdraws the $3,000.00 his deposited the time before. At the end of the year the fund is worth $31,425.00. a) What is the Dollar Weighted Return for Piotr's investment? b) What is the Time Weighted Return for the investment fund? c) What would the fund balance at the end of year have to be to make the Time Weighted Return for the year equal the Dollar Weighted Return for the year? d) In this case (TWR = DWR) what was the return on the investment fund in the last time period?
8. Deposits of 1000 are placed into a fund at the end of each year for the next 25 years for the subsequent purchase of a perpetuity. Five years after the last deposit, annual payments commence and continue forever. If i = .09 then find the amount of each payment.
At the beginning of each year, Jerome invests $1,400 semiannually at 8% for nine years. Using the tables found in the textbook, determine the cash value of the annuity due at the end of the ninth year. A. $37,939.86 B. $37,339.68 C. $37,399.68 D. $38,739.68
Erik invested $575 at the end of every month in an investment fund that was earning interest at a rate of 4.20% compounded monthly. He stopped making regular deposits at the end of 6 years when the interest rate changed to 6.69% compounded quarterly. However, he let the money grow in this investment fund for the next 4 years. a. Calculate the accumulated balance in his investment fund at the end of 6 years. b. Calculate the accumulated balance in his investment fund at the end of 10 years. c. Calculate the total interest earned over the 10-year period.
Theodore makes beginning of year deposits of 3000 for 10 years into a fund earning interest at an annual effective interest rate of 5%. At the end of each year, the interest earned is deposited into a second fund earning interest at an annual effective interest rate of 6%. Find the total accumulated value of his assets at the end of 10 years.
Pearl Alvarez is investing $323,200 in a fund that earns 8% interest compounded annually. What equal amounts can Pearl withdraw at the end of each of the next 20 years? (Round factor values to 5 decimal places, eg 1.25124 and final answer to O decimal places, eg. 458,581) Yearly withdrawals=
Find the amount of each payment to be made into a sinking fund so that enough will be present to accumulate the following amount. Payments are made at the end of each period. The interest rate given is per period. $49,000; money earns 4% compounded semiannually for 13.5 years
Al Darby wants to withdraw $21400 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 12% compounded annually? $21400 times the present value of a 5-year, 12% ordinary annuity of 1. $21400 times the future value of a 5-year, 12% ordinary annuity of 1. $21400 divided by the present value of a 5-year, 12% ordinary annuity of 1. $21400 divided by the future value of a 5-year, 12% ordinary annuity of 1.
A man deposits $10,000 at the beginning of each year for 15 years in an account paying 6% compounded annually. He then puts the total amount on deposit in another account paying 7% compounded semiannually for another 11 years. Find the final amount on deposit after the entire 26-year period. He will have a final amount of $ after the entire 26-year period. (Simplify your answer. Round to the nearest cent as needed.)

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