Your parents just gave you $10,000 to be saved for a down payment on a home. You agree to save an additional $500 each month for the next three years in an investment account that compounds interest monthly. How much will you have saved at the end of three years assuming the annual interest rate is (a) 5% compounded monthly, (b) 7% compounded monthly, or (c) 9% compounded monthly? Formulas should include the =FV function and return a POSITIVE value. Initial investment Additional amount invested at the end of each month Term of investment (years) Compounding periods per year Interest rate 5% compounded monthly 7% compounded monthly 9% compounded monthly $10,000 $500 3 12 Future Value

Your parents just gave you $10,000 to be saved for a down payment on a home. You agree to save an additional $500 each month for the next three years in an investment account that compounds interest monthly. How much will you have saved at the end of three years assuming the annual interest rate is (a) 5% compounded monthly, (b) 7% compounded monthly, or (c) 9% compounded monthly? Formulas should include the =FV function and return a POSITIVE value. Initial investment Additional amount invested at the end of each month Term of investment (years) Compounding periods per year Interest rate 5% compounded monthly 7% compounded monthly 9% compounded monthly $10,000 $500 3 12 Future Value

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

Suppose you'd like to save enough money to pay cash for your next car. The goal is to save an extra $⁢28,000 over the next 33 years. What amount must be deposited quarterly into an account that earns 4.7% interest, compounded quarterly, in order to reach your goal? Round your answer to the nearest cent, if necessary.
After graduation, you just got hired by an engineering company and you were planning to take aloan in order to purchase a new car. Let’s assume that the bank is willing to offer you a personalloan with an annual interest rate of 6% compounded yearly. The car price is 26,500 JD and youare capable to pay 4,200 JD per year. After how many years you will be able to pay back the loanwith the accumulated interest (use a spreadsheet to answer this question) and draw the cash flowdiagram.
An investment promises to pay $7,000 at the end of each year for the next six years and $3,000 at the end of each year for years 7 through 10. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 15 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$ Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 15 percent required rate of return?$
You are saving for a new house. You place $55,000 into an investment account each year for five years. How much will you have after five years if the account earns (a) 3%, (b) 5%, or (c) 7% compounded annually? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1) a. b. C. Annuity Payment $ 55,000 55,000 55,000 > Answer is complete but not entirely correct. Annual Rate 3% 5% 7% Interest Compounded Annually Annually Annually Period Invested 5 years 5 years 5 years Future Value of Annuity $ 63,760.07 X 70,195.49 X 77,140.35 x
You are saving for a new car. You place $14,200 into an investment account today. How much will you have after four years if the account earns (a) 4%, (b) 6%, or (c) 8% compounded annually? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
4. Use the present value of an annuity formula to find the maximum car loan that you can afford if you can afford to pay $250 per month, the interest rate is 3%, and you want to have it paid off in 4 years? Assume monthly payments. Write out the formula first to show your work.
Suppose you want to save $1,000,000 for a retirement fund in 35 years. You anticipate making regular, end-of-month deposits in an annuity that pays 9% compounded monthly. How much should you deposit each month? Use this formula: How much of the $1,000,000 retirement fund comes from deposits and how much comes from interest?

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