us compound interest with QUARTERLY compounding at a rate of 6% APR. We set a goal of saving up money for the next six years for a car, a vacation, or for a down payment for a house. We set our total savings goal to be $20,317 or within one dollar of this. a. How much money will we need to deposit (i.e. save) each quarter in order to meet our savings goal?

us compound interest with QUARTERLY compounding at a rate of 6% APR. We set a goal of saving up money for the next six years for a car, a vacation, or for a down payment for a house. We set our total savings goal to be $20,317 or within one dollar of this. a. How much money will we need to deposit (i.e. save) each quarter in order to meet our savings goal?

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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Assume that you need $1,000 four years from today. Your bank compoundsinterest at an 8 percent annual rate. a.How much must you deposit one year from today to have a balance of$1,000 in your account four years from today? b.If you want to make equal payments each year, how large must each of thefour payments be if the first deposit is made one year from today? c.If your father were to offer either to make the payments calculated in part(b) ($221.92) or to give you a lump sum of $750 in one year, which wouldyou choose? d.If you have only $750 in one year, what interest rate, compounded annually,would you have to earn to have the necessary $1,000 four years from today? e.Suppose you can deposit only $186.29 each for the next four years, begin-ning in one year, but you still need $1,000 in four years. At what interestrate, with annual compounding, must you invest to achieve your goal? f. To help you reach your $1000 goal, your father offers to give you $400 in one year. You will get…
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?
How much do you have to deposit today so that beginning 11 years from now you can withdraw $12,000 a year for the next 6 years (periods 11 through 16) plus an additional amount of $24,000 in the last year (period 16)? Assume an interest rate of 9 percent.
Your savings account pays 6% annually. Assuming this interest rate remains constant, how much do you need to deposit in your savings account today to accumulate $200 in 4 years? Round to the nearest cent. O A. $164.17 O B. $158.42 OC. $172.38 O D. $186.81
Suppose you invest in an annuity that pays 5% interest, compounded semiannually. How much will you need to invest, semiannually, to reach a savings goal of $500,000 at the end of 25 years?
Suppose you'd like to save enough money to pay cash for your next car. The goal is to save an extra $⁢28,000 over the next 33 years. What amount must be deposited quarterly into an account that earns 4.7% interest, compounded quarterly, in order to reach your goal? Round your answer to the nearest cent, if necessary.
Tutorial Exercise Suppose that your bank pays 6% interest, compounded quarterly. Use Table 12-2 to find how much should be deposited now to yield an annuity payment of $1,600 at the end of each three months, for 3 years. Step 1 The present value of an annuity is the amount needed now so that desired annuity payments may be made in the future. Since payments will be made at the end of each three months, this is an ordinary annuity. To find the present value of this annuity, the amount of money that should be deposited in an account now, the interest rate per period must first be found. The interest rate per period is calculated using the nominal, or annual, rate and the number of periods per year as follows. nominal rate interest rate per period = periods per year The rate was given to be 6%. Interest is compounded quarterly, or 4 times per year. Find the interest rate per period. nominal rate interest rate per period periods per year 4 |% The total number of compounding periods will be…
Your savings account pays 4% interest on the $40,000 you deposited at time 0. Inflation was 3% for 4 years and then 2% for 6 years. How much is in the account after 10 years in year-10 dollars? How much is that in year-0 dollars? What has been your real rate of return?
Use the savings plan formula to answer the following question. You put $300 per month in an investment plan that pays an APR of 3.5%. How much money will you have after 19 years? Compare this amount to the total deposits made over the time period.
If you put $1,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in 7 years? Round the answer to the nearest cent. Round FV-factor to three decimal places or use the Appendix A . (Hint: Use the future value formula.) $ How much interest will you earn during the 7 years? Round the answer to the nearest cent. $ If you put $1,000 at the end of each year into a savings account that pays interest at the rate of 3 percent a year, how much would you have after 7 years? Use the Appendix B . Round the answer to the nearest cent. Round FV-factor to three decimal places. $
Suppose you want to save $1,000,000 for a retirement fund in 35 years. You anticipate making regular, end-of-month deposits in an annuity that pays 9% compounded monthly. How much should you deposit each month? Use this formula: How much of the $1,000,000 retirement fund comes from deposits and how much comes from interest?

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