Question 2:: Mohamed is going to be paying AED 120,000 rent for his new apartment in JVC at the beginning of each year for the next 5 years to Paul Real Estate's bank account. The account pays an interest of 8%, compounded annually. a. Briefly explain what is an annuity due. b. Using the above information, calculate the future value of Mohamed's periodic payments. (- c. Given the same present value, the same compound interest rate and the same period, which type (ordinary annuity or annuity due) generates a higher future value amount? Why? (

Question 2:: Mohamed is going to be paying AED 120,000 rent for his new apartment in JVC at the beginning of each year for the next 5 years to Paul Real Estate's bank account. The account pays an interest of 8%, compounded annually. a. Briefly explain what is an annuity due. b. Using the above information, calculate the future value of Mohamed's periodic payments. (- c. Given the same present value, the same compound interest rate and the same period, which type (ordinary annuity or annuity due) generates a higher future value amount? Why? (

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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9. Implied interest rate and period Consider the case of the following annuities, and the need to compute either their expected rate of return or duration. Jacob needed money for some unexpected expenses, so he borrowed $2,138.41 from a friend and agreed to repay the loan in three equal installments of $800 at the end of each year. The agreement is offering an implied interest rate of . Jacob’s friend, Devan, wants to go to business school. While his father will share some of the expenses, Devan still needs to put in the rest on his own. But Devan has no money saved for it yet. According to his calculations, it will cost him $31,897 to complete the business program, including tuition, cost of living, and other expenses. He has decided to deposit $3,800 at the end of every year in a mutual fund, from which he expects to earn a fixed 6% rate of return. It will take approximately for Devan to save enough money to go to business school.
Problem 6 A person wants to establish an annuity for retirement purposes. He wants tomake quarterly deposits for 20 years so that he can then make quarterly withdrawals of$5,000 for 10 years. The annuity earns 7.32% interest compounded quarterly.(a) How much will have to be in the account at the time he retires?(b) How much should be deposited each quarter for 20 years in order to accumulate the Please give full solutionrequired amount?
I need help with this question.
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
for x=6
If you borrows $60,000 from the bank at 10% interest over the 7 years of the loan. • What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest (round to the nearest dollar)? • How much of his first payment will be applied to Interest? To Principle? • How much of his second payment will be applied to Interest? To Principle?
Find the monthly payment for each loan below. Remember to assume monthly compounding. 11. Sean and Sam purchase a house with a $20,000 down payment. The purchase price of the house was $475,000 and they financed the rest for 3.75% for 30 years. Their annual taxes will be $2856, and their annual insurance will be $1984. What will their monthly principal, interest, tax, and insurance (PITI) mortgage payment be?
Your classmate tells you the details of the great deal he got on his mortgage: 30-year 1.1% fixed rate with a 20% down payment a.)If his new home costs $136,000, what is his down payment? b.)How much is he going to borrow to buy the house (assuming he only has the money to make the down payment from the previous part)? c.)Use Excel’s PMT function to determine how much his monthly payments would be. d.)How much will he pay in interest over the lifetime of this mortgage?
1. You deposit GHS10,000 today into an account paying 6% annual interest and leave it on deposit for exactly eight years. Required: How much will be the amount in the account at the end of eight years if interest is compounded annually? 2. Imagine you are a professional personal finance planner. One of your clients ask you the following question. Use time value of money technique to develop appropriate responses in each question. I borrowed GHS75,000, am required to repay it in six equal (annual) end of year instalments of GHS3,344 and want to know what interest rate I am paying.
Suppose you borrowed $400 from a friend and promised to repay the loan by making three annual payments at the end of each of the next three years plus a final payment of $200 at the end of year 4. The interest rate is 9%. What is the annuity amount?
Find the monthly house payment necessary to amortize the following loan. 9) In order to purchase a home, a family borrows $121,000 at 3.0% for 30 yr. What is their monthly payment? Round the answer to the nearest cent.
1. Exercise One: Jessica decides to take a $25,000 to help her cover her tuition expenses. The tenor of the loan is 10 years, and the interest rate is 6.75%. Repayments will be made on a monthly frequency. Based on the aforementioned information, and the material covered in class, (a) use the PMT function in Excel to find the fixed total payment, (b) verify your answer from (a) by programming the present value annuity formula as shown in class, (c) create an amortization schedule for this loan, (d) create a bar chart showing the Fixed Total Payment, Interest Paid, and Principal Paid.

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