Your grandmother just died and left you $112,500 in a trust fund that pays 6.3% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the mext 3 years and end up with zero in the account? O a. $32,689.86 O b. $7,087.50 O c. $39,812.95 O d. $30,752.46 Oe. $24,085.01

Your grandmother just died and left you $112,500 in a trust fund that pays 6.3% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the mext 3 years and end up with zero in the account? O a. $32,689.86 O b. $7,087.50 O c. $39,812.95 O d. $30,752.46 Oe. $24,085.01

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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Your grandparents would like to establish a trust fund that will pay you and your heirs $185,000 per year forever with the first payment one year from today. If the trust fund earns an annual return of 3.6 percent, how much must your grandparents deposit today? Multiple Choice: $4,743,589.74 $4,282,407.41 $5,138,888.89 $4,496,527.78 $5,873,015.87
10. Kristine has $5,000 in an account today that pays 3% interest rate. Two years from now she withdraws $1,000 from that account to buy a laptop. How much will she have in this account in 6 years if she does not make any other deposits or withdrawals? Assume annual compounding. a. $4,844.75 b. $7,095.77 c. $4,776.21 d. $7,164.31 e. $4,970.26 11. Your grandaunt wants to buy an (ordinary) annuity that will pay her cost of living of $70,000 per year for 20 years. If the quoted interest rate today is 5% and the annuity compounds monthly, how much does this annuity cost? a. $872,354.72 b. $865,404.52 c. $883,897.66 d. $863,824.15 12. After graduation, you get a great job. You budget $1,000 per month towards housing. You'd like to buy a house. Assume that the interest rate = 4% for a 30-year mortgage. a. How much can you borrow? i. $209,461.24 ii. $207,504.40 iii. $694,049.40 iv. $24,999.98 b. Eight years into the mortgage, your company decides to relocate you to Hawaii. How much must you…
Jeni has decided that she needs to start saving for her retirement. She can afford $100 a month deducted automatically from her paycheck. She deposits it into an account that earns 4.5% interest compounded monthly. How much will she have in her account when she retires 42 years later? A. $ 14,922.70 B.$ 50,400.00 C. $132,213.00 D. $149,226.96
Slick Sam has a special relationship with his banker. The nature of the relationship is as follows: • The bank owes Sam $100 per year forever. The 1st payment is due in 1 year. • The bank will borrow or lend money to Sam at a constant effective rate of i per year. Today, Sam calculated the present value of the payments that are due to him as X. Sam can receive his first 16 payments at the end of year 16 in a lump sum. If he does that, then the total value of the lump sum and future payments at the end of the sixteenth year is X + 2,000. Calculate X. A B с D E 3,330 3,350 3,400 3,450 3,500
Your grandmother just died and left you $47,500 in a trust fund that pays 6.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account? a. $3,087.50 b. $13,865.38 c. $10,120.08 d. $16,840.23 e. $13,019.14
Your parents contribute $180 monthly to a college savings plan for you that earns 5.4% compounded monthly. The first deposit was exactly 18 years ago. Find the account balance immediately after today’s monthly deposit and crediting of interest. a. $69,456 b. $65,975 c. $45,589 d. $59,689 e. $72,096
When you were born, your grandparents put $5,000 in to a money market account to help with your college education. The bank gave them a guaranteed interest rate of 6% per year until you turned 18. How much money will be in the account on your 18th birthday if you never withdraw any money until that day? $11,417.20 $54,138.00 $1751.50 $14,271.50
Kia deposited $1,100, at the BEGINNING of each year for 25 years in a credit union account. If the account paid 8% interest, compounded annually, use the appropriate formula to find the future value of her account. A. $73,441.24 B. $80,416.53 C. $86,849.86 D. $87,949.86
Grandma Patt has decided to open a savings account for her newborn granddaughter. The savings account pays 3% interest. If Grandma Patt wants there to be $10,000 in the account in 18 years, how much should she deposit today? Assume no other deposits or withdrawals. a) $5,873.95 b) $17,024.33 c) $8,362.17 d) $10,609.23
You would like to give your son $70,000 towards his college education 12 years from now. How much money must you set aside today for this purpose if you can earn 8% on your investments? B. $176.271.91 C. $27.797.96 A. $12.250.00 interest rate, you will triple your money in ately D. $3,688.65 E. $14.211.11
How much would Dave have in his account at the end of 20 years if he deposits $2,000 into the account today if he earned 4 percent interest and interest is compounded continuously? Select one: a. $4,444 b. $4,521 c. $4,317 d. $4,451
0. Tammy is saving up money for an emergency fund. She hopes to have 4 months' worth of income accumulated, and she takes home $2500 a month. She plans on depositing monthly increments for the next year and a half into a sinking fund which earns 8% Interest, How much should each deposit be?

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