The Flores Family loves to go sailing on the weekends. Mr. Flores has decided to purchase a more spacious sailboat. The sailboat he is interested in buying in 2 years will cost him $ 20,000. An account at Invest Well Bank earns 2% per year compounded monthly. How much should Mr. Flores deposit in this account at the beginning of each month to be able to pay cash for the sailboat in 2 years?

The Flores Family loves to go sailing on the weekends. Mr. Flores has decided to purchase a more spacious sailboat. The sailboat he is interested in buying in 2 years will cost him $ 20,000. An account at Invest Well Bank earns 2% per year compounded monthly. How much should Mr. Flores deposit in this account at the beginning of each month to be able to pay cash for the sailboat in 2 years?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 6E

See similar textbooks

Similar questions

Max wants to save $500,000 to give to the local clown college. Max decides he can afford to deposit $10000 each month into an account which pays 4% monthly. How many full deposits will Max need to make? a) What will be the size of the concluding deposit one month after the last full deposit
Benji wants to purchase a new car in 4 years. He plans on putting $8,000 down. He will be putting a sum away at the beginning of each month to accumulate this amount in an account paying 9% that compounds monthly. What payment will he have to make to reach his goal?
Sean needs $18,000 immediately as a down payment on a new home. He can borrow this money from his company credit union. He will be required to repay the loan in equal payments made every six months, starting two years from now, over the next 5 years. The annual interest rate is 10%. Draw a cash flow diagram in the point of view of Sean. How many equal payments should be made?
James wants to buy a car in 5 years. The car is expected to cost $30,000 at that time. How much money would James need to put as a single lump-sum amount today in a savings account earning 4% per year in order to accumulate that $30,000 in five years?
Emilia and Liam are purchasing a home. They wish to save money for 10 years and purchase a house that has a value of $150,000 with cash. If they deposit money into an account paying 4% interest, compounded monthly, how much do they need to deposit each month in order to make the purchase? Round your answer to the nearest cent, if necessary.
Julieta and Eric are purchasing a home. They wish to save money for 12 years and purchase a house that has a value of $170,000 with cash. If they deposit money into an account paying 7 % interest, compounded monthly, how much do they need to deposit each month in order to make the purchase? Round your answer to the nearest cent, if necessary.
2. Andy is planning to buy a car when he graduates from college 4 years from now. The estimated valueof the car is $25000. He will need to make a down-payment equal to 20% of the value of the car. Heplans to raise the down-payment by making equal monthly deposits into a bank savings account thatpays interest at the rate of 6% per year, so that he has the down-payment, four years from now. Hewants you to help him Ögure out the minimum monthly deposit he will have to make for the next 4years.(a) What is the monthly interest rate the bank pays?(b) At this moment you do not know the value of the monthly deposit he has to make. Let it be Pdollars per month. Write down an expression for the total value of all the monthly payments hewill deposit, (including interest), over the 4 year period.(c) The expression in part (b) should equal the down-payment he will need for the down-payment.Use that information to determine P . Show the work leading to your answer. Round o§ youranswer to the nearest…
Andy has asked you to bankroll his proposed business painting houses in the summer. He plans to operate the business for 5 years to pay his way through college. He needs $5000 to purchase an old pickup, some ladders, a paint sprayer, and some other equipment. He is promising to pay you $1500 at the end of each summer (for 5 years) in return. Calculate your annual rate of return.
Your cousin Jeremy has asked you to bankroll his proposed business painting houses in the summer. He plans to operate the business for 5 years to pay his way through college. He needs $5000 to purchase an old pickup, some ladders, a paint sprayer, and some other equipment. He is promising to pay you $1500 at the end of each summer (for 5 years) in return. Calculate your annual rate of return.
Flora is planning ahead for a 3-month world tour to celebrate completing graduate school. The trip’s estimated cost is $7,000. Flora would like to accumulate that sum over the next 4 years. She plans to make monthly deposits into her school’s minibank which gives 5% interest compounded monthly. How much does she has to contribute monthly?
Can you please help me work out this problem in detail? Tony Ring wants to attend Northeast College. He will need $60,000 4 years from today. Assume Tony’s bank pays 6% interest compounded semiannually. What must he deposit today so he will have $60,000 in 4 years?
Todd can afford to pay $335 per month for the next 5 years in order to purchase a new car. The interest rate is 5.7 percent compounded monthly. What is the most he can afford to pay for a new car today?