Analysts at Sky West Airlines did a 3 year projection of expenses. They calculated that the company will need $15,200 at the beginning of each 6 month period to buy fuel, oil, lube, and parts for aircraft operations and maintenance. Sky West can get 4% interest compounded semiannually from its bank. How much (in $) should Sky West deposit now to support the next 3 years of operations and maintenance expenses? (Round your answer to the nearest cent.)
Analysts at Sky West Airlines did a 3 year projection of expenses. They calculated that the company will need $15,200 at the beginning of each 6 month period to buy fuel, oil, lube, and parts for aircraft operations and maintenance. Sky West can get 4% interest compounded semiannually from its bank. How much (in $) should Sky West deposit now to support the next 3 years of operations and maintenance expenses? (Round your answer to the nearest cent.)
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
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Analysts at Sky West Airlines did a 3 year projection of expenses. They calculated that the company will need $15,200 at the beginning of each 6 month period to buy fuel, oil, lube, and parts for aircraft operations and maintenance. Sky West can get 4% interest compounded semiannually from its bank. How much (in $) should Sky West deposit now to support the next 3 years of operations and maintenance expenses? (Round your answer to the nearest cent.)
![### Annuity Table Explanation
This table displays factors for calculating the future value of an annuity for different interest rates and periods. The values are generated using the formula:
\[
\frac{{(1 + i)^n - 1}}{{i(1 + i)^n}}
\]
Where \(i\) is the interest rate per period, and \(n\) is the total number of periods. The results are rounded to five decimal places.
#### Table Columns:
- **Periods**: Ranges from 1 to 36.
- **Interest Rates** (1% to 8%): Each column corresponds to a specific interest rate.
#### Usage:
To use the table, select your interest rate and period. Find the intersecting cell, which provides the annuity factor for calculating the future value based on that rate and period.
#### Example:
- For a 5% interest rate over 10 periods, the annuity factor is 7.72173.
This table is instrumental in financial planning, helping calculate how much periodic investments will grow over time at varying interest rates.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd201cd7c-f0d9-4cde-8ad3-a66bd40ce2a0%2Faa060ed0-6b11-449f-8bf6-edc9503a16a5%2F5jr4x8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Annuity Table Explanation
This table displays factors for calculating the future value of an annuity for different interest rates and periods. The values are generated using the formula:
\[
\frac{{(1 + i)^n - 1}}{{i(1 + i)^n}}
\]
Where \(i\) is the interest rate per period, and \(n\) is the total number of periods. The results are rounded to five decimal places.
#### Table Columns:
- **Periods**: Ranges from 1 to 36.
- **Interest Rates** (1% to 8%): Each column corresponds to a specific interest rate.
#### Usage:
To use the table, select your interest rate and period. Find the intersecting cell, which provides the annuity factor for calculating the future value based on that rate and period.
#### Example:
- For a 5% interest rate over 10 periods, the annuity factor is 7.72173.
This table is instrumental in financial planning, helping calculate how much periodic investments will grow over time at varying interest rates.
![### Educational Website Transcription of Table 12-2
This table presents the values of a financial calculation using various interest rates over multiple periods.
#### Headings:
- **Columns**: Interest rates from 9% to 18%
- **Rows**: Number of periods from 1 to 36
#### Table Content:
- **Periods**: Lists duration from 1 to 36, repeated twice, on the leftmost and rightmost columns.
- **9% to 18% interest rates**: Displays calculated values for each number of periods based on the interest rate.
#### Formula:
The values were calculated using the formula:
\[
\frac{(1 + i)^n - 1}{i(1 + i)^n}
\]
where:
- \(i\) = interest rate per period
- \(n\) = total number of periods
- The results are rounded to five decimal places.
This table can be used to understand how various interest rates affect financial outcomes over different periods, useful for studies in finance and economics.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd201cd7c-f0d9-4cde-8ad3-a66bd40ce2a0%2Faa060ed0-6b11-449f-8bf6-edc9503a16a5%2F3xu4ale_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Educational Website Transcription of Table 12-2
This table presents the values of a financial calculation using various interest rates over multiple periods.
#### Headings:
- **Columns**: Interest rates from 9% to 18%
- **Rows**: Number of periods from 1 to 36
#### Table Content:
- **Periods**: Lists duration from 1 to 36, repeated twice, on the leftmost and rightmost columns.
- **9% to 18% interest rates**: Displays calculated values for each number of periods based on the interest rate.
#### Formula:
The values were calculated using the formula:
\[
\frac{(1 + i)^n - 1}{i(1 + i)^n}
\]
where:
- \(i\) = interest rate per period
- \(n\) = total number of periods
- The results are rounded to five decimal places.
This table can be used to understand how various interest rates affect financial outcomes over different periods, useful for studies in finance and economics.
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Analysts at Sky West Airlines did a 3 year projection of expenses. They calculated that the company will need $15,200 at the beginning of each 6 month period to buy fuel, oil, lube, and parts for aircraft operations and maintenance. Sky West can get 4% interest compounded semiannually from its bank. How much (in $) should Sky West deposit now to support the next 3 years of operations and maintenance expenses? (Round your answer to the nearest cent.)
$
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