With an interest rate of 6.5% p.a, compounded monthly, (i) Calculate the equivalent value of all cash flow in year 15. (ii) Calculate the future value of all cash flows after 30 years by assuming that there are no more transactions after 15 years. (iii) Calculate the yearly amount to be deposited in 30 years to get the amount as calculated in (ii).

With an interest rate of 6.5% p.a, compounded monthly, (i) Calculate the equivalent value of all cash flow in year 15. (ii) Calculate the future value of all cash flows after 30 years by assuming that there are no more transactions after 15 years. (iii) Calculate the yearly amount to be deposited in 30 years to get the amount as calculated in (ii).

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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In the information given int he following case, determine the number of years that the given oridinay annuity cash flows must continue inorder to provide the rate of return on the intial amount. Initial amount: $26,800 Annual Cash Flow: $6,561 Rate of Return: 6%
Suppose you deposit $2,000 at the end of eachquarter for ten years at an interest rate of 9% compounded monthly. What equal end-of-year depositover the ten years would accumulate the same amountat the end of the ten years under the same interestcompounding? To answer the question, which of thefollowing is correct?(a) A = $2,000(F/A, 2.267%, 4)(b) A = $2,000(F/A, 9%12 , 40) * (A/F, 9%, 10)(c) A = [$2,000(F/A, 2.25%, 40)] * (A/F, 9%, 10)(d) None of the above
Find the future values of the ordinary annuities at the given annual rate r compounded as indicated. The payments are made to coincide with the periods of compounding. (Round your answer to the nearest cent.) PMT = $200, r = 2.7%, compounded semiannually for 25 years
Gary King will deposit $27500 into an account today that earns 13% per year compounded annually. Using the following factors, what is the amount that will be in the account at the end of the 5 years? Type of Cash Flow Periods Interest Rate Factor PV of $1 5 13% 0.5428 FV of $1 5 13% 1.8424 PV ordinary annuity 5 13% 3.5172 FV ordinary annuity 5 13% 6.4803 PV annuity due 5 13% 3.9744 $25333 $50666 $14927 $29854
Note: Please sketch the cash-flow diagram.
Consider these two annuities. Annuity 1: $150 invested at the end of each 6 months for 20 years at 4.6%, compounded semi-annually. Annuity 2: $300 invested at the end of each year for 20 years at 4.6%, compounded annually. a) Calculate the total deposit, earned interest, and amount for Annuity 1. b) Calculate the total deposit, earned interest, and amount for Annuity 2. c) Which annuity earns more interest? Explain why.
Using the future values tables, solve the following: What is the future value on December 31, Year 11, of 20 cash flows of $15,000 with the first cash payment made on December 31, Year 1, and the annual interest rate of 10% being compounded semiannually?
Receives a cash flow consisting of $15,000 per year in an amount at the end of each year for 10 years. The interest is 9.5% per year compounded annually. Determine the present value at time zero and the future value at the end of 10 years of this cash flow.
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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
Calculate the present worth of the money if the ₱ 300.00 is invested at the end of each year for 8 years and the first payment was made 3 years from now. Use an annual interest rate of 8%.
What would the effect of the failure in the ratio measurement?

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