Q1. You have been told that you need $x today in order to have $100,000 when you retire 20 years from now. The annual interest rate is 5% on average. Computex. Answer Q2. You plan to make a $40,000 contribution to your individual retirement account, at 3.5 percent per year on average. Compute how much it will be worth if you deposit it for 25 years. Answer Q3. Repeat Q1-Q2, when the interest rate is being componded every SIX MONTHS (or SEMIANNUALLY). Answer Q4. Erica is purchasing a financial instrument that will pay $5,000 a year for seven years, at the end of every year. How much should she pay for this investment today if she wishes to earn a 12 percent rate of return? Answer Q5. Repeat Q5, when you are committed to making contributions at the beginning of every year. Answer Q6. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with annual installments of $36,000 for thirty years. Answer Q7. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with MONTHLY installments of 3,000 for 360 months. Answer Q8. Webster Mining is considering the purchase of a new sorting machine worth $450,000. If the quote states annual installments for seven years at 7.8 percent interest, what is the installment amount? Answer
Q1. You have been told that you need $x today in order to have $100,000 when you retire 20 years from now. The annual interest rate is 5% on average. Computex. Answer Q2. You plan to make a $40,000 contribution to your individual retirement account, at 3.5 percent per year on average. Compute how much it will be worth if you deposit it for 25 years. Answer Q3. Repeat Q1-Q2, when the interest rate is being componded every SIX MONTHS (or SEMIANNUALLY). Answer Q4. Erica is purchasing a financial instrument that will pay $5,000 a year for seven years, at the end of every year. How much should she pay for this investment today if she wishes to earn a 12 percent rate of return? Answer Q5. Repeat Q5, when you are committed to making contributions at the beginning of every year. Answer Q6. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with annual installments of $36,000 for thirty years. Answer Q7. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with MONTHLY installments of 3,000 for 360 months. Answer Q8. Webster Mining is considering the purchase of a new sorting machine worth $450,000. If the quote states annual installments for seven years at 7.8 percent interest, what is the installment amount? Answer
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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Transcribed Image Text:Q1. You have been told that you need $x today in order to have $100,000 when you retire 20 years from now. The annual interest rate is 5% on average. Computex.
Answer
Q2. You plan to make a $40,000 contribution to your individual retirement account, at 3.5 percent per year on average. Compute how much it will be worth if you deposit it for 25 years.
Answer
Q3. Repeat Q1-Q2, when the interest rate is being componded every SIX MONTHS (or SEMIANNUALLY).
Answer
Q4. Erica is purchasing a financial instrument that will pay $5,000 a year for seven years, at the end of every year.
How much should she pay for this investment today if she wishes to earn a 12 percent rate of return?
Answer
Q5. Repeat Q5, when you are committed to making contributions at the beginning of every year.
Answer
Q6. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with annual installments of $36,000 for thirty years.
Answer
Q7. Solve for x: Jane recently purchased a new home with a mortgage of $x. She financed it at 6.6 percent interest with MONTHLY installments of 3,000 for 360 months.
Answer
Q8. Webster Mining is considering the purchase of a new sorting machine worth $450,000. If the quote states annual installments for seven years at 7.8 percent interest, what is the installment amount?
Answer
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