Your brother has decided to ask you for advice about saving up for his teenager's college fund. He plans on withdrawing $15,000 at the end of year 5, $17,000 at the end of year 6, and $20,000 each at the end of year 7 and year 8. How much does your brother need to deposit today into an account with an annual interest rate of 1%?

Your brother has decided to ask you for advice about saving up for his teenager's college fund. He plans on withdrawing $15,000 at the end of year 5, $17,000 at the end of year 6, and $20,000 each at the end of year 7 and year 8. How much does your brother need to deposit today into an account with an annual interest rate of 1%?

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 estimate you need to supplement your social security payments with monthly withdrawals of $1,400.00 per month from a private investment account during the first 23 years of your retirement. Assuming you can earn annual returns of 5.2% in your investment account during your retirement years, how much money do you need to have accumulated in your investment account by the day you retire in order to fund the aforementioned monthly withdrawals?
Your son just turned 4 years old. You anticipate he will start University when he turns 18. You would like to have funds in a registered education savings plan (RESP) to fund his education at that time. You anticipate he will spend 6 years in university, and it will cost $40,000 per year at the start of each school year. When he graduates (debt free) you would also like him to have $50,000 for a down payment on a condo or to travel. If the account promises to pay a fixed interest rate (APR) of 6% per year with monthly compounding, how much money do you have to deposit each quarter to ensure you will have enough when he starts university? Assume you will make the same deposit at the end of each quarter until he starts university.
When you were born, your dear old Aunt Minnie promised to deposit $1,000 in a savings account for you on each and every one of your birthdays, beginning with your first. The savings account bears a 7 percent compound annual rate of interest. You have just turned25 and want all the cash. However, it turns out that dear old (forgetful) Aunt Minnie made no deposits on your seventh, and eleventh birthdays. How much is in the account now – on your twenty-fifth birthday
Mike's parents decide to deposit an amount of money at the end of every month into a bank account earning interest at the rate of 5% per year compounded monthly. If the savings program began when Mike was 4 years old, how much money should his parents deposit monthly so there will be an accumulated fund of $120,000 by the time he turns 19 years old?
Question - : Your child is going to college for the next 4 years. You are setting up a college fund that your child withdraws from at the BEGINNING of each 6 month period (2 withdrawls each year). Each withdrawl is $ 3000. The account pays 12% annual interest rate, compounded 2 times a year. How much money should you put in the account now?
When you were born, your parents started to deposit monthly $2,000 in the bank. The bank offers a fixed interest rate of 15 percent. On your 18th birthday, your parents decide to withdraw the money that they deposited to pay for your college tuition. How much money can they expect to withdraw? What is the present value of your end-of-year investment of $1,000 per year, with the first cash flow received three years from today and the last one 10 years from today? Use a discount rate of 12 percent Consider the stock of BIC Company has an annual dividend of $ 3 in 2020. The dividend is expected to grow at a constant rate of 7 percent permanently in 2023. The market requires a 14 percent return on the company. What is the current price of a share of the stock? You have just found the perfect home. However, in order to buy it, you will need to take out a TRL 450,000, 10-year mortgage at an annual rate of 15,50 percent. What will your monthly mortgage payments be? ABC…
Your grandmother has been putting $1,000 into a savings account on every birthday since your first (that is, when you turned one). The account pays an interest rate of 3%. How much money will be in the account immediately after your grandmother makes the deposit on your 18th birthday
2. (a) A college student, Amy, decides to fund a retirement account with $2000 per year for 8 years, with the first deposit made one year from today. The rate of return will be 10%. How much will she have in her account when she retires in 40 years? (b) Amy’s friend, Dacio, decides he will start funding his retirement account 8 years from now (first payment in 9 years). He then will invest $2000 each year for 32 years. If his rate of return is 10%, how much will he have when he retires in 40 years?
When you were born, your dear old Aunt Minnie promised to deposit $1,000 in a savings account for you on each and every one of your birthdays, beginning with your ﬁrst. The savings account bears a 5 percent compound annual rate of interest. You have just turned 25 and want all the cash. However, it turns out that dear old (forgetful) Aunt Minnie made no deposits on your ﬁfth, seventh, and eleventh birthdays. How much is in the account now – on your twenty-ﬁfth birthday.
When you were born, your dear old Aunt Minnie promised to deposit $1,000 into a savings account bearing a 5% compounded annual rate on each birthday, beginning with your first. You have just turned 22 and want the dough. However, it turns out that dear old (forgetful) aunt Minnie made no deposits on your third, fifth, and eleventh birthdays. How much is in the account right now?
How much will you have in your bank account after 4 years ifyou deposit $5,000 of your high-school graduation gifts into an account that pays a fixed interest rate of 5% per year?
The parents of a newborn decide to make deposits into an educational savingsaccount on each of their daughter's birthdays, starting with her first birthday.Assume that the educational savings account will return a constant 5.5% per year.The parents plan to deposit $2 200 on every of their daughter's future birthdays.How much money could they alternatively deposit on their daughter's birth date(today) to have the same amount available on her 18th birthday?

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