Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually. Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Question

You just bought a new car for $X. To pay for it, you took out a loan that requires regular monthly payments of $1,640 for 27 months and a special payment of $25,200 in 6 months. The interest rate on the loan is 1.27 percent per month and the first regular payment will be made in 1 month. What is X? Input instructions: Round your answer to the nearest dollar. 59 $

Answer 1

Question

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

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You just bought a new car for $X. To pay for it, you took out a loan that requires regular monthly payments of $1,640 for 27 months and a special payment of $25,200 in 6 months. The interest rate on the loan is 1.27 percent per month and the first regular payment will be made in 1 month. What is X? Input instructions: Round your answer to the nearest dollar. 59 $

How much do you need in your account today if you expect to make quarterly withdrawals of $8,900 for 7 years and also make a special withdrawal of $34,500 in 7 years. The expected return for the account is 3.28 percent per quarter and the first regular withdrawal will be made in 3 months. Input instructions: Round your answer to the nearest dollar. $

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Answer 2

Question

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

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Answer 3

Question

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

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Answer 4

Question

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

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Answer 5

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 6

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 7

Chapter 5, Problem 25P

a.

Summary Introduction

To compute: Future value of annuity of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 8

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 9

b.

Summary Introduction

To compute: Future value of annuity of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly.

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 10

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 11

c.

Summary Introduction

To explain: The reason for annuity in part (b) is larger than annuity in part (a).

Future value of annuity: It states the value of regular payments that are made at a future date. The future value is defined by the specified rate of return or by the discount rate. If there is a fluctuation in regular payments then each of the cash flow is to be computed to get the future value of annuity.

Answer 12

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Solution Summary: The author calculates the future value of annuity of 400 paid each 6 months for 5 years at 12% compounded semiannually.

Chapter 5 Solutions