Salem plans to deposit $2200 every 6 months for 15 years to save for his son's higher education. The rate of return will be 4% compounded semi-annually for the first 5 years and 8% compounded semi-annually for the subsequent 10 years. Calculate the future value of this simple annuity, if he stops payment after 5 years.

Salem plans to deposit $2200 every 6 months for 15 years to save for his son's higher education. The rate of return will be 4% compounded semi-annually for the first 5 years and 8% compounded semi-annually for the subsequent 10 years. Calculate the future value of this simple annuity, if he stops payment after 5 years.

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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The Calvarusos have decided to invest in a college fund for their young son. They invested $40,000 in a deferred annuity that will pay their son at the beginning of every month for 4 years, while he goes to college. If the account earns 2.50% compounded monthly and the annuity payments are deferred for 15 years, what will be the size of the monthly payments?
The Ward family wants to save money to travel the world. They purchase an annuity with a quarterly payment of $181 that earns 4.7% interest, compounded quarterly. Payments will be made at the end of each quarter. Find the total value of the annuity in 11 years.
Bilbo plans to save for his retirement in 30 years (t=30) from today, with constant annual saving of $50,000 starting from year 1 (t=1) through year 30 (t=30). Bilbo aims to maintain constant annual expense in the retirement from year 31 (t=31) to year 50 (t=50). The annual discount rate for Bilbo’s entire life is 10%. What is Bilbo’s maximum expense per year in his retirement? If Bilbo also wants to leave $10,000,000 to his son Frodo in year 50 (t=50), what is his maximum annual expense in the retirement?
Hank made payments of $161 per month at the end of each month for 30 years to purchase a piece of property. He promptly sold it for $136,752. What interest rate, compounded monthly, would he need to earn on an ordinary annuity for a comparable rate of return? (Round to the nearest hundredth as needed.)
Mia plans to save for retirement starting at the age of 35 (year O). She will make a payment at the beginning of each year until age 64. Starting from age 65, she will withdraw 100,000 USD every year for 20 years until her age of 84. Her account balance will reach to $0 at the beginning of her age 85. The retirement plan Mia is looking at provides a interest rate of 10% annually. What would be the fair annual payment for 30 years of this retirement plan? $5175.61 $4275.33 $5293 $53669
Your grandparents would ilke to establish a trust fund that will pay you and your heirs $125,000 per year forever with the first payment 10 years from today. If the trust fund earns an annual return of 2.4 percent, how much must your grandparents deposit today?
Khalil has decided to start an ordinary annuity.he plans to deposit $500 into this account each month at 2.4 % annual interest compounded monthly. How much will he have in this account in 20 years?
To help out with her retirement savings, Linda invests in an ordinary annuity that earns 6.6% interest, compounded annually. Payments will be made at the end of each year. Continue How much money does she need to pay into the annuity each year for the annuity to have a total value of $97,000 after 17 years? Do not round intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas. 50°F Mostly cloudy Es O 2 2 W 0 3 E 4 X R O S F6 % 5 € T Y F8 & 7 a 7 U 27 D * 00 Submit Assignmen 2022 McGraw Hill LLC. All Rights Reserved. Terms of Use | Privacy Center | Accessibility F10 D X I 9 2 F11 PDF F12 NumLk Prt Sc ^ Pause Br +
Hassan will receive the following payments at the end of the next four years: AED 50,000, AED 60,000, AED 75,000 and 80,000. Then from the end of the fourth year through the end of the ninth year, he will receive an annuity of AED 75,000. At a discount rate of 5 percent, what is the present value of all future benefits?
Marc has nothing saved for retirement. He wants to receive $46,000.00 per year for 5 years during retirement. The first of these payments will be received in 7 years. Marc can earn a return of 9.38 percent per year. How much does Marc need to save each year for 6 years to have exactly enough to meet his retirement goal if he makes his first annual savings contribution in 1 year and all savings contributions are equal? O $21,324.88 (plus or minus 10 dollars) O $25,513.05 (plus or minus 10 dollars) O $23,325.15 (plus or minus 10 dollars) O $20,819.31 (plus or minus 10 dollars) O none of the answers are within 10 dollars of the correct answer
To ensure his retirement income, a 40-year old man plans to purchase annuity when he turns 65. The annuity will pay $7,500 at the end of each month for 20 years, and the value is calculated at 5% interest, compounding monthly. To pay for this annuity, he starts making annual level deposits in a mutual fund, which earns 8% interest each year. He makes the first one right away, and makes deposits at the beginning of each year for 25 years. How much does he need to deposit each year in order to save enough to buy his annuity?
Sean plans to invest $10,000 in a savings account that pays 1.5% compounded quarterly. His friend suggests that he invest in an account paying the same interest rate but that pays interest compounded monthly. How much more interest will he earn at the end of 10 years if he follows his friend's advice?

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