Suppose you receive $190 at the end of each year for the next three years.a. If the interest rate is 7%, what is the present value of these cash flows?b. What is the future value in three years of the present value you computed in (a)?c. Suppose you deposit the cash flows in a bank account that pays 7% interest per year. What is the balance in the account at the end of each of the next three years(after your deposit is made)? How does the final bank balance compare with your answer in (b)?

Present Value of annuity refers to the current value of all the series of payments or income at…

Answered: Suppose you receive $190 at the end of…

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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Similar questions

1. If you deposit $28,688 annually at the end of every year in a bank account paying 5% annually, how much would you have saved at the end of ten years? Round your answer to the nearest one dollar.
2. If you want to have $22,327 in fifteen years, how much do you need to deposit in a bank account today? Assume that the annual interest rate is 10% compounded annually. Round your answer to the nearest one dollar.
If 8000 dollars is invested in a bank account at an interest rate of 7 per cent per year, Find the amount in the bank after 15 years if interest is compounded annually: Find the amount in the bank after 15 years if interest is compounded quarterly: Find the amount in the bank after 15 years if interest is compounded monthly: Finally, find the amount in the bank after 15 years if interest is compounded continuously: Check Answer
Explain well both question with paper answer.
You put 8,293 in the bank for 11 years at 5% what factor would you use to calcuate the future value of your deposit?
Suppose that you deposit $15 at the end of each month into a savings account that pays 2% interest compounded monthly. After a year, ------ is in the account.
The interest on a particular savings account is compounded continuously. The account initially had $2,200 deposited in it. The worth of the account after t-years can be calculated using the formula: A(t)=2200e0$1 (a) By what percent will the worth of the account increase per year? Round to the nearest hundredth of a percent. (b) To the nearest tenth of a year, how long will it take for the worth of the account to triple? (c) If another investment began with a principal of $2,500 and earned simplest interest of 3.8% applied once per year, which investment would be worth more after 10 years? Justify
Suppose you invest $160 a month for 6 years into an account earning 6% compounded monthly. After 6 years, you leave the money, without making additional deposits, in the account for another 29 years. How much will you have in the end?
How much do you need to deposit into a bank in order to receive proceeds of $200,000 in 5 years if the interest rate is 2.5% What if interest is compounded quarterly?
Suppose that P 4500 is deposited each year into a bank account that pays 8% interest compounded quarterly. How much would be accumulated in his fund by the end of the 4th year? The first payment occurs at time zero (now). Please draw a cash flow diagram. Thank you
Suppose you want to have $200 in an account after 5 years. If the account generates interest at a nominal rate of 9%, compounded quarterly, how much should you invest in the account now?
A person wishes to deposit $5,000 per year in a savings account which earns interest of 8 percent per year compounded annually. Assume the first deposit is made at the end of this current year and additional deposita at the end of each following year. (a) To what sum will the investment grow at the time of the 10th deposit? (b) How much interest will be earned?

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