Liz and Bob just had a baby named Isabelle, and they want to save enough money for Isabelle to go to college. Assume that they start making monthly payments when Isabelle is 3 into an ordinary annuity earning 4.48%, and they calculate that they will need $25,200.00 by the time Isabelle turns 18. How much should they deposit every month so that they reach their goal? Deposit amount = Note: Your answer is a dollar amount and should include a dollar sign

Liz and Bob just had a baby named Isabelle, and they want to save enough money for Isabelle to go to college. Assume that they start making monthly payments when Isabelle is 3 into an ordinary annuity earning 4.48%, and they calculate that they will need $25,200.00 by the time Isabelle turns 18. How much should they deposit every month so that they reach their goal? Deposit amount = Note: Your answer is a dollar amount and should include a dollar sign

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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Tom and Sandy have set up a sinking fund in order to have $21,000.00 in 5 years for their child's college education. How much should be paid monthly into an ordinary annuity earning 7.46% compounded monthly so that they reach their goal? How much interest is earned during the last year? (Note: Your answer is a dollar amount and should include a dollar sign)
2. (a) A college student, Amy, decides to fund a retirement account with $2000 per year for 8 years, with the first deposit made one year from today. The rate of return will be 10%. How much will she have in her account when she retires in 40 years? (b) Amy’s friend, Dacio, decides he will start funding his retirement account 8 years from now (first payment in 9 years). He then will invest $2000 each year for 32 years. If his rate of return is 10%, how much will he have when he retires in 40 years?
When you were born, your dear old Aunt Minnie promised to deposit $1,000 into a savings account bearing a 5% compounded annual rate on each birthday, beginning with your first. You have just turned 22 and want the dough. However, it turns out that dear old (forgetful) aunt Minnie made no deposits on your third, fifth, and eleventh birthdays. How much is in the account right now?
Shelly Franks is planning for her retirement, so she is setting up a payout annuity with her bank. She is now 35 years old, and she will retire when she is 65. She wants to receive annual payouts for twenty years, and she wants those payouts to receive an annual COLA of 4%. (a) She wants her first payout to have the same purchasing power as does $15,000 today. How big should that payout be if she assumes inflation of 4% per year? $ 48605.96 (b) How much money must she deposit when she is 65 if her money earns 8.3% interest per year? $ (c) How large a monthly payment must she make if she saves for her payout annuity with an ordinary annuity? (The two annuities pay the same interest rate.) $ (d) How large a monthly payment would she make if she waits until she is 40 before starting her ordinary annuity? %$4
Your grandma gave you $150 to start a college fund when you were born. This account earns 6% interest compounded yearly. Then, she gave you $10 in this account on each of your birthdays. Finally, you found a $20 bill on the ground on your 8th birthday that you also put into this account. How much much money is in this account on your 18th birthday (after your grandma made her deposit)? Do by formulas only pls, you may use excel to verify if you want.
John, a 25-year-old teacher, wants to start saving for his retirement. John wants a comfortableretirement, so he needs to have one million dollars in his saving account, which pays 2.4% annualinterest rate, when he reaches 67 years of age.a. How much should John deposit into his saving account monthly now? Round your answer to thenearest cent.b. If John wants the one million dollars in his saving account to last him 20 years into hisretirement, how much could he withdraw from the saving account monthly? You can assume thesaving account will pay the same 2.4% annual interest rate. Round your answer to the nearestcent.c. If John increases his monthly deposit in part (a) by $200, how much will be in his saving accountif he wants to retire at 60 years of age? Round your answer to the nearest cent.
A mother is thinking about funding her daughter’s medical education in 6 years when she is expected to enrol at UWI, St. Augustine. She opens a special savings account, where she can receive a lump sum in 6 years. If she is desirous of receiving $50,000 in 6 years when her daughter is matriculating, how much would you advise her to deposit in the savings account monthly if annual interest rate is 7%? Show all working.
Your cousin is currently 12 years old. She will be going to college in 6 years. Your aunt and uncle would like to have $90,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 4.2% per year, how much money do they need to put into the account today to ensure that they will have $90,000 in 6 years?
Tom and Antonio both want to open savings accounts today. Tom wants to have $1,000 in his savings account six years from now. Antonio wants to have $1,000 in his savings account three years from now. Tom will need to deposit twice the amount of money today as Antonio. Select one: True False
Grandma Patt has decided to open a savings account for her newborn granddaughter. The savings account pays 3% interest. If Grandma Patt wants there to be $10,000 in the account in 18 years, how much should she deposit today? Assume no other deposits or withdrawals. a) $5,873.95 b) $17,024.33 c) $8,362.17 d) $10,609.23
Lara wishes to buy a gift for her parent's golden wedding anniversary. She decided to deposit a consistent amount of money every week into her savings account at an interest rate of 1.5% and made a decision not to withdraw any amount from the account. How much money will she have after 2 years if she decided to deposit $750 each week?
Your cousin is currently 8 years old. She will be going to college in 10 years. Your aunt and uncle would like to have $95,000 in a savings account to fund her education at that time. If the account promises to pay a fixed interest rate of 4.3% per year, how much money do they need to put into the account today to ensure that they will have $95,000 in 10 years? The amount they need to put away today is $ (Round to the nearest cent.)

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