Trish invests $6,000 in her IRA in a bond trust that pays 11% interest compounded semiannually. Sean invests $6,000 in his IRA in a certificate of deposit that pays 10.7% compounded continuously. Who has more money after 20 years, Trish or Sean? After 20 years, Trish will have $ . (Round to the nearest cent as needed.) After 20 years, Sean will have $ - (Round to the nearest cent as needed.) After 20 years, V will have more money.

Trish invests $6,000 in her IRA in a bond trust that pays 11% interest compounded semiannually. Sean invests $6,000 in his IRA in a certificate of deposit that pays 10.7% compounded continuously. Who has more money after 20 years, Trish or Sean? After 20 years, Trish will have $ . (Round to the nearest cent as needed.) After 20 years, Sean will have $ - (Round to the nearest cent as needed.) After 20 years, V will have more money.

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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Rhett is about to begin college (4-year) and has received a 10-year $7,500 Federal Direct Unsubsidized Loan with an interest rate of 6.4%. He will be required to begin making payments six months after graduation. If Rhett decides to capitalize the interest (which totals $2,160) from the time he receives the funds until he begins making payments in 4.5 years, how much total interest would he pay on this loan?
Heather deposited $1, 700 at her local credit union in a savings account at the rate of 9.8% paid as simple interest. She will earn interest once a year for the next 13 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Heather in 13 years?
Mike and Emily each have invested $100, 000 in an investment account. No other contributions will be made to their investment account. Both have the sarne goal; they each want their account to reach $3,000,000 at which time each will retire. Mike has his money invested in risk free securities with an expected return of 12% compounded monthly. Emily has her money invested in a stock fund with an expected return of 15% compounded quarterly. How many years after Emily retires will Mike retire?
Belinda invested a sum of money for her two years old child education in the amount of fifty thousand pesos at the rate of 10 ½% compounded quarterly. After a year, she added another fifty thousand on her investment. She withdraw the total amount of her investment when her child entered college at the age of 18. What is the maturity value of her investment?
Belinda invested a sum of money for her two-year-old child education in the amount of fifty thousand pesos at the rate of 10 ½% compounded quarterly. After a year, she added another fifty thousand on her investment. She withdraw the total amount of her investment when her child enter college at the age of 18. What is the maturity value of her investment?
2. Rita has received a gift of $15 000 from her grandma and she plans to put this in a 6-year term deposit on which she will receive an S% interest compounded monthly. What amount will she have after 6 years if she makes this investment?
28. Penny decides on her 30th birthday to start planning for her future by deposit $2000 at the end of each year in an investment that pays 4%/a, compounded annually, until her 50th birthday. She then leaves the money in the investment to collect interest at 5%/a compounded semiannually until her 65th birthday. a) Determine how much money she will have on her 65th birthday. b) Penny's best friend, Susan, decides to wait until her 45th birthday to start planning for her future. Susan can get the same rate of return (4%/a compounded annually) on her investment. Find the yearly payment that she would be required to make until 65th birthday so that her investment is equivalent to Penny's investment.
Twins Natalie and Kaitlyn are both age 27. They both live in Warren, Ohio. Beginning at age 27, Natalie invests $2,000 per year for ten years and then never sets aside another penny. Kaitlyn waits ten years and then invests $2,000 per year for the next 30 years. Assuming they both earn 7 percent, how much will each twin have at age 67.
Bill is twenty-five years from retirement; in order to retire, Bill needs $500,000 in his savings account when he retires in order to maintain his current standard of living. If Bill has $100,000 in his savings account right now, and the account earns 5% annually (compounded continuously), how much does Bill need to save each year to reach his goal? (Assume that Bill continuously deposits this annual sum into his savings account.)
When Joe and Sarah graduate from college, each expects to work a total of 45 years. Joe begins saving for retirement immediately. He plans to deposit $600 at the end of each quarter into an account paying 8.1% interest, compounded quarterly, for 10 years. He will then leave his balance in the account, earning the same interest rate, but make no further deposits for 35 years. Sarah plans to save nothing during the first 10 years and then begin depositing $600 at the end of each quarter in an account paying 8.1% interest, compounded quarterly for 35 years. Complete parts (a) through (e) below. a. Without doing any calculations, predict which one will have the most in his or her retirement account after 45 years. Then test your prediction by answering the following questions. Choose the correct answer below. O A. Joe will have more in his account after 45 years. Sarah contributed more money overall, but Joe was earning 8.1% interest per quarter for 35 years. Sarah will have more in her…
Meg O'Brien borrowed $75,000 to pay for her child's education. She must repay the loan at the end of 8 years in one payment with 8.75% interest. What is the maturity value Meg must repay?
3. Billy and Mandy Eastwood recently divorced, and Mandy has custody of their 5-year-old daughter. As part of the divorce settlement, Billy must pay Mandy $3,000 at the end of each half year until their daughter reaches age 16. Billy decides to put a lump sum into an account with a guaranteed yield of 5% compounded semiannually. Find the lump sum deposit he must make today to equal the balance of the annuity after 13 years.

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