You are thinking of building a new machine that will save you $3,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 2% per year forever. What isthe present value of the savings if the interest rate is 9% per year?The present value of the savings is $(Round to the nearest dollar.)Enter your answer in the answer box and then click Check Answer.All parts showingClear AllCheck AnswerMacBook Air Assume that your parents wanted to have $170,000 saved for college by your 18th birthday and they started saving on your first birthday. They saved the same amount each year on your birthdayand earned 11.5% per year on their investments.a. How much would they have to save each year to reach their goal?b. If they think you will take five years instead of four to graduate and decide to have $210,000 saved just in case, how much would they have to save each year to reach their new goal?a. How much would they have to save each year to reach their goal?To reach the goal of $170,000, the amount they have to save each year is $(Round to the nearest cent.)Enter your answer in the answer box and then click Check Answer.partremainingClear AllCheck Answer

Present value of savings = Savings in first year / (required rate - growth rate)

You are thinking of building a new machine that will save you $3,000 in the first year. The machine will then begin to wear out so that the savings decline ata rate of 2% per year forever. What is the present value of the savings if the interest rate is 9% per year? The present value of the savings is $ (Round to the nearest dollar.)

You are thinking of building a new machine that will save you $3,000 in the first year. The machine will then begin to wear out so that the savings decline ata rate of 2% per year forever. What is the present value of the savings if the interest rate is 9% per year? The present value of the savings is $ (Round to the nearest dollar.)

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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An investment offers $6500 per year forever, with the first payment occurring one year from now. If the required return is 7 per cent, What would the value be?
Compound interest is a very powerful way to save for your retirement. Saving a little and giving it time to grow is often more effective than saving a lot over a short period of time. To illustrate this, suppose your goal is to save $1 million by the age of 68. What amount of money will be saved by socking away $5,388 per year starting at age 29 with a 7% annual interest rate. Will you achieve your goal using the long-term savings plan? What amount of money will be saved by socking away $17,190 per year starting at age 44 at the same interest rate? Will you achieve your goal using the short-term savings plan? Click the icon to view the interest and annuity table for discrete compounding when i = 7% per year. The future equivalent of the long-term savings plan is $. (Round to the nearest dollar.) You achieve your goal using the long-term savings plan. The future equivalent of the short-term savings plan is $. (Round to the nearest dollar.) You V achieve your goal using the short-term…
You just turned 23 years old and want to retire when you turn 65. You expect to withdraw $70,000 per year for 25 years during retirement, starting first withdrawal one year after your 65th birthday. You expect to earn a return of 7% on your investments every year. 1. How much retirement saving do you need to have by 65th birthday to support the withdrawals in the next 25 years? Or the same question can be asked differently, what is the present value (as of your 65th birthday) of the withdrawals you expect to make? 2. How much money should you save each year if you make the first deposit one year from your 23th birthday and the last one on 65th birthday?
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Suppose you invest $200 a month for 6 years into an account earning 9% compounded monthly. After 6 years, you leave the money, without making additional deposits, in the account for another 20 years. How much will you have in the end? $ Suppose instead you didn't invest anything for the first 6 years, then deposited $200 a month for 20 years into an account earning 9% compounded monthly. How much will you have in the end?
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