You have been accepted into university. The university guarantees that your tuition will not increase for the four years you attend. The first $11,300 tuition payment is due in six months. After that, the same payment is due every six months until you have mada total of eight payments. The university offers a bank account that allows you to withdraw money every six months and has a fixed APR of 3.9% (compounded semi-annually) guaranteed to remain the same over the next four years. How much money mustyou deposit today if you intend to make no further deposits and would like to make all the tuition payments from this account, leaving the account empty when the last payment is made? (Note: Be careful not to round any intermediate steps less than sixdecimal places.)The amount of money you must deposit today is S(Round to the nearest cent.)

The present value is the value of the sum received at time 0. It is the current value of the sum…

Answered: You have been accepted into university.…

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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Similar questions

You have a loan outstanding. It requires making seven annual payments of $4,000 each at the end of the next seven years. Your bank has offered to allow you to skip making the next six payments in lieu of making one large payment at the end of the loan's term in seven years. If the interest rate on the loan is 6%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?
You have just completed your four-year degree at Southwest Minnesota State University (SMSU)! Your student loans that you have accumulated while studying at SMSU total $25,000. Since you have graduated, you must now begin repaying these student loans. The loan’s annual interest rate is six percent (6%) and it requires four equal end-of-year payments. a) Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. B) What is the total amount that you will repay over this four-year period (principal + interest)? c) What portion or percentage are the total “Interest Payments” of the initial loan value of $25,000?
You deposit $1,500 at the end of the year (k = 0) into an account that pays interest at a rate of 7% compounded annually. A year after your deposit, the savings account interest rate changes to 12% nominal interest compounded monthly. Six years after your deposit, the savings account again changes its interest rate; this time the interest rate becomes 8% nominal interest compounded quarterly. Eight years after your deposit, the saving account changes its rate once more to 6% compounded annually. a. How much money should be in the savings account 18 years after the initial deposit, assuming no further changes in the account's interest rate? b. What interest rate, compounded annually, is equivalent to the interest pattern of the saving account in Part (a) over the entire 18 year period? a. $ should be in the savings account 18years after the initial deposit. (Round to the nearest dollar.) b. The interest rate equivalent to the interest pattern of the saving account in Part (a) over the…
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Tuition of $1219 will be due when the spring term begins in 3 months. What amount should a student deposit today, at 6.47%, to have enough to pay the tuition? The student should deposit $ (Simplify your answer. Round to the nearest dollar as needed.)
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Jason Stein from Topeka, Kansas, borrows $1,500 (including interest) for four years (48 months) at an interest rate of 7% per year. The loan uses the discount method for determining the amount of interest. How much of the loan amount ($1,500) consists of interest? How much of the loan is actually given directly to Jason? What is the monthly payment (rounded to the nearest penny), assuming 48 monthly payments?
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You deposit $2,000 at the end of the year (k = 0) into an account that pays interest at a rate of 6% compounded annually. A year after your deposit, the savings account interest rate changes to 12% nominal interest compounded monthly. Five years after your deposit, the savings account again changes its interest rate; this time the interest rate becomes 8% nominal interest compounded quarterly. Nine years after your deposit, the saving account changes its rate once more to 5% compounded annually. a. How much money should be in the savings account 17 years after the initial deposit, assuming no further changes in the account's interest rate? b. What interest rate, compounded annually, is equivalent to the interest pattern of the saving account in Part (a) over the entire 17 year period?
Beginning three months from now, you want to be able to withdraw $2,200 each quarter from your bank account to cover college expenses over the next four years. If the account pays .43 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years? Quarterly withdrawal Quarters per year Number of years Interest rate per quarter $ 2,200 4 4 0.43% Complete the following analysis. Do not hard code values in your calculations. Your answer should be positive. Amount needed today

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