Shamsir's small business has been growing slowly. He has noticed that his monthly profit increases by 1 percent every two months. Suppose that the profit at the end of this month is $21,000. What is the present value of all his profits over the next two years? Annual nominal interest is 18 percent, compounded monthly. Shamsir's profits over the next two years will be S

Shamsir's small business has been growing slowly. He has noticed that his monthly profit increases by 1 percent every two months. Suppose that the profit at the end of this month is $21,000. What is the present value of all his profits over the next two years? Annual nominal interest is 18 percent, compounded monthly. Shamsir's profits over the next two years will be S

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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David wants to retire in 40 years. If he puts away $300 per quarter, at the end of each quarter, into an account earning 5.5% compounded quarterly, how much will he have when he retires?
Mark saves a fixed percentage of his salary throughout each year. This year he saved $1500. For the next 5 years, he expects his salary to increase at an 8% annual rate, and he plans to increase his savings at the same 8% annual rate. He invests his money evenly twice a year in the stock market. There thus will be six midyear investments and six end of year investments. Solve the problem by using the geometric gradient factor. 2. How much will the investment be worth at the end of the six years if they increase in the stock market at a 8% annual rate? Select one: a. $12,911 b. $13,299 c. $13,224 d. $13,512
Robert wants to have $2,300 at the end of every three months for 8 years. The bank pays 8% interest, compounded quarterly. Robert calculates that the present value of the ordinary annuity is $53,977.16. What would be the present value if payments were to be received at the beginning of every period rather than the end?
Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $760 and has an existing customer base of 700. Paul plans to raise the annual fee by 7 percent every year and expects the club membership to grow at a constant rate of 6 percent for the next five years. The overall expenses of running the health club are $240,000 a year and are expected to grow at the inflation rate of 2 percent annually. After five years, Paul plans to buy a luxury boat for $650,000, close the health club, and travel the world in his boat for the rest of his life. Assume Paul has a remaining life of 25 years after he retires and earns 7 percent on his savings. a. How much will Paul have in his savings on the day he starts his world tour assuming he has already paid for his boat? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the annual amount that Paul can spend while on his world tour if he will have no money…
Tom wants to put aside $120 at the end of each month into an account earning 6% compounded monthly, and have 30,000 at the end of ten years. How much would tom’s initial balance have to be? Savings lans are one of the common types of annuities. As stated earlier, an annuity is a series of equal payments amde at regular intervals. We will look at ordinary annuities in which payments are made at the end of each period. The futrue value of an ordianry annuity formula is A is the future value r is the annual interest rate n is the number of interest periods per year t is the number of years m is the regular payment
suppose Andy invests $1000 at the end of every quarter for the next 11 years in an account that earns 7.3% compounded quarterly. how much money will Andy have in his account after the 11 years?
Pueblo starts his account with the amount of $8,000. he add $100 each month. the account earns 7.1% interest, compounded monthly. The investment will last him for about 41 years. Pubelo thinks that beyond the $100 that he add each month, how much additional monthly payment will he need to add in order for the account to end with $770,000 after 41 years.
8. Troy has a retirement account worth $1,250,000. The accountdraws 4.5% compounded monthly. a. How much can he withdraw each month and not change the balance? b. If he withdraws $4000 each month, what will be the value of the account in 20 years? c. How much can he withdraw each month from the $1,250,000 to make the account last 30 years?
Thomas has started working, and he is wondering how much he needs to put aside every month to purchase a TV IN 2 YEARS. Thomas needs exactly $3,275 to purchase a new TV .The money he puts aside he will earn interest every month. The interest is compounded monthly.\The annual interest is 6%.
Answer each of the following independent questions. Ignore personal income taxes. Required: 1. Suppose you invest $4,000 in an account bearing interest at the rate of 12 percent per year. Complete the table to show how your accumulation grows each year to equal $7,896.00 after six years. 2. You have estimated that your educational expenses over the next three years will be $14,500 per year. Your account bears interest at 9 percent per year. Complete the table given below to show that $36,699.50 is the amount you need to fund your educational expenses. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Suppose you invest $4,000 in an account bearing interest at the rate of 12 percent per year. Complete the table to show how your accumulation grows each year to equal $7,896.00 after six years. (Round your answers to 2 decimal places.) Year Beginning Balance Interest 1 2 3 4 5 6 End Balance
Sofia plans to save for next two years. She plans to put away $1000 every 6 months starting 6 months from now. What will be the value of her savings after two years if her savings accounts earns at a rate of 8% compounded semi- annually?

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