Millicent is planning to travel to the United States of America in 3 year - time. She estimated that her vacation would cost $ 1,236,000. Given the existing interest rate of 6%, how much money should she invest now.

Millicent is planning to travel to the United States of America in 3 year - time. She estimated that her vacation would cost $ 1,236,000. Given the existing interest rate of 6%, how much money should she invest now.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 11E

See similar textbooks

Related questions

Q: Jazelle Momba wants to visit her family in Zimbabwe in 2025, which is 7 years from now. She knows…

A: The time value of money seems to be an essential financial notion that states that cash in the now…

Q: Madison is thinking of buying an investment from PEP. If she purchases the investment, Madison will…

A: The present value of the annuity due is the current worth of a cash flow series received/paid at the…

Q: Gabby is planning to buy a home. She has some money for a down payment already saved. She sees a…

A: Step 1). Monthly payment on the borrowing is calculated using following equation Monthly payment =…

Q: Aloha would like to take a vacation to the Caribbean Islands in 3 years. She invests $2,500 in a…

A: The amount available for vacation can be calculated with the help of future value function

Q: Matilda is planning for her daughter’s university education to begin five years from today. She…

A: PRESENT VALUE OF ANNUITY: PVA=A×1-11+rnr where, A=annuity r=rate of interest n=number of years

Q: Justine is thinking about purchasing an investment from RCBC Capital. If she buys the investment,…

A: Receipts = 1000 every quarter for 2 years Beginning of period payments Time Period = 2 years * 4 = 8…

Q: elle Momba wants to visit her family in Zimbabwe in 2022, which is 7 years from now. She knows that…

A: Future value required=$7200Period=7yearsInterest rate=6%Semi annual periods=n=14Semi annual…

Q: Michelle wants to set aside funds to take an around the world cruise in four years. Assuming that…

A: FV = A * (1+r)nwhereFV = future value A = Amount investedr = interest raten = time period

Q: Jazelle Moma wants to visit her family in Zimbabwe in 2028, which is 6 years from now. She knows…

A: It is a case of depositing a fund whose future value in 6 years time will help meet all the expenses…

Q: Angela is planning for her daughter’s university education in seven (7) years’ time. She estimated…

A: Annual payment required to achieve the goal is calculated using following equation Annual payment =…

Q: Jazelle Momba wants to visit her family in Zimbabwe in 2025, which is 6 years from now. She knows…

A: The time value of money (TVM) seems to be the concept whereby the money you have today is worth more…

Q: Syariqul Haq is trying to save up for a big vacation. He plans to take a trip around Japan when he…

A: Future value The future value indicates the value of a current investment over a specified period…

Q: (b) Aminah plans to buy a house in Shah Alam which the market price is RM450,000. To buy the house,…

A: The amount to be deposited each year is known as an annuity. It refers to the equal payments made at…

Q: Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 3…

A: The future value of ordinary annuity is the group of instalment payment of fixed amount at a certain…

Q: If your daughter is 5 and she plans to go to college or university in Canada when she is 18 years…

A: Present Value is the current value of all the cash flows which is to be received in the future which…

Q: Fatema wants to invest an amount of OMR. 2000 every year to go on vacations with her husband at the…

A: Annual Amount invested =OMR 2000 Years (n) = 5 Interest Rate(r1) = 7.85% = 0.0785 Interest rate(r2)…

Q: how much does she need to deposit today to cover the total cost of her visit?

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: Saleh is considering an investment that will pay $5,000 a year for 7 years, starting one year from…

A: Given: Years = 7 Amount = $5, 000 Interesting rate = 12%

Q: How much do you think her parents must deposit now in order for her to have a total of RM30,000 at…

A: Present Value: It is the present worth of the annuity payments or savings made in the future.…

Q: Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 5…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: Sofia wants to start saving immediately for a trip to Hong Kong one year from now. She wants to…

A: An annuity due is a series of equal cash flows made at the start of each period. The future value of…

Q: nifer is planning a trip to Alaska in 5 years. She has calculated that she will need $15,000 to…

A: In this we need to calculate the present value of future needs.

Q: Justine is thinking about purchasing an investment from RCBC Capital. If she buys the investment,…

A: present value of annuity=A×1-11+RMM×NRM A=ANNUITY R=RATE OF INTEREST M=FREQUENCY OF COMPOUNDING…

Q: wants to surprise her husband with a European vacation for their tenth anniversary, which is five…

A: The given problem can be solved using PV function in excel. PV function computes amount deposited…

Q: Jazelle Momba wants to visit her family in Zimbabwe in 2025, which is 7 years from now. She knows…

A: Number of periods = 7 years x 2 = 14 semiannum Interest rate per semiannum = 4% /2 = 2%

Q: Arnold and Helene would like to visit Austria in two years to celebrate their 25th wedding…

A: Future Value = Present Value(1+Interest÷100)× (1+Interest÷100)

Q: Roxanne plans on going on vacation to Europe in four years. The trip will cost $4,000. She proposes…

A: PRESENT VALUE Present Value is the current value of Future Cash flow. Present Value = Future…

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Millicent is planning to travel to the United
States of America in 3 year - time. She
estimated that her vacation would cost $
1,236,000. Given the existing interest
rate of 6%, how much money should she
invest now.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define present value of money

VIEW

Step 2: Calculate the present value

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Jane wants to set aside funds to take an around the world cruise in four years. Jane expects that she will need $20,000 for her dream vacation. If she is able to earn 8% per annum on an investment, how much will she have to set aside today so that she will have sufficient funds available?
Maria wants to set aside funds to take an around the world cruise in four years. Maria expects that she will need $26000 for her dream vacation. If she is able to earn 7% per annum on an investment, how much will she need to set aside at the beginning of each year to accumulate sufficient funds?
Roxanne plans on going on vacation to Europe in four years. The trip will cost $4,000. She proposes to finance the trip by investing a sum of money now at 8% compounded annually. How much should Roxanne invest now in order to obtain her goal of $4,000? Answer the following questions: Fill in the factor that you used to solve the problem : How much should Roxanne invest now in order to obtain her goal (round up to the nearest dollar)?
A young engineer wants to surprise her husband with a European vacation for their tenth anniversary, which is five years from now. She determine that the trip will cost $7,000. Assuming an interest rate of 5.5% compounded daily, approximately how much money does she need to deposit today for the trip?
Michelle wants to set aside funds to take an around the world cruise in 7 years. Michelle expects that she will need $26500 for her dream vacation. If she is able to earn 8% per annum on an investment, how much will she have to set aside today so that she will have sufficient funds available? O $15462. O $14316. O $2970. O $45414.
Your goal is to spend a year traveling around the world. You assume that it will cost $100,000 to accomplish this goal and you have 10 years to save for it. You presently have $10,000 to invest. What annual rate of compounding interest must you earn on your investment to cover the cost of this trip?
Sofia wants to start saving immediately for a trip to Hong Kong one year from now. She wants to accumulate P220,000 for the trip. Her savings account pays 12% compounded bimonthly. What must she deposit at the beginning of every two months to reach the target in one year?
Jazelle Momba wants to visit her family in Zimbabwe in 2025, which is 7 years from now. She knows that it will cost approximately $8,100 including flight costs, on-the-ground costs, and extra spending money to stay for 4 months. If she opens an account that compounds interest at 6% semiannually, how much does she need to deposit today to cover the total cost of her visit?
Your grandparents leave on their dream vacation to Antartica in three years. The cruise vacation will cost them $24,000. If they have already saved $22,500 and are inveting it at a rate of 2.50% per year, will they have saved enough money for their trip?
Justine is thinking about purchasing an investment from RCBC Capital. If she buys the investment, Justine will receive P1,000 every three months for two years. The first P1,000 payment will be made as soon as she purchases the investment. If Justine's required rate of return is 16%, how much should she be willing to pay for this investment? a.P1,368.57 b.P10,764.80 c.P1,345.60 d.P7,002.05
If she starts now, how much does Sally need to save each month for the next 9 years to accumulate $110,000 to be able to buy her dream vacation property. Assume she will be able to get a 2.5% annual rate of return on the savings. Input your answer to the nearest dollar. Answer: Check 4
Suppose an individual wants to have $200,000 available for her child's education. Find the amount that would have to be invested at annual rate 7%, compounded continuously, if the number of years until college is 6 years.