Foundations of Finance (9th Edition) (Pearson Series in Finance)
9th Edition
ISBN: 9780134083285
Author: Arthur J. Keown, John D. Martin, J. William Petty
Publisher: PEARSON
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Chapter 5, Problem 30SP
(Compound
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(Compound
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6
percent annually. If you make your first deposit at the end of this year, and you would like your account to reach
$30,000
when the final deposit ismade, what will be the amount of your deposits?
The amount of your end-of-year deposits will be
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Construct the payment schedule for the first 6 payments by filling in the table below:
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principal
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6
Chapter 5 Solutions
Foundations of Finance (9th Edition) (Pearson Series in Finance)
Ch. 5 - Prob. 1RQCh. 5 - The processes of discounting and compounding are...Ch. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 1SPCh. 5 - Prob. 2SPCh. 5 - Prob. 3SPCh. 5 - Prob. 4SPCh. 5 - (Compound value) Stanford Simmons, who recently...
Ch. 5 - (Future value) Sarah Wiggum would like to make a...Ch. 5 - Prob. 7SPCh. 5 - Prob. 8SPCh. 5 - Prob. 9SPCh. 5 - Prob. 10SPCh. 5 - Prob. 11SPCh. 5 - Prob. 13SPCh. 5 - Prob. 14SPCh. 5 - Prob. 15SPCh. 5 - Prob. 16SPCh. 5 - Prob. 17SPCh. 5 - Prob. 18SPCh. 5 - Prob. 19SPCh. 5 - Prob. 20SPCh. 5 - Prob. 21SPCh. 5 - Prob. 22SPCh. 5 - Prob. 23SPCh. 5 - (Solving for PMT of an annuity) To pay for your...Ch. 5 - Prob. 25SPCh. 5 - Prob. 26SPCh. 5 - (Loan amortization) On December 31, Beth Klemkosky...Ch. 5 - (Solving for r of an annuity) You lend a friend...Ch. 5 - Prob. 29SPCh. 5 - (Compound annuity) You plan on buying some...Ch. 5 - (Loan amortization) On December 31, Son-Nan Chen...Ch. 5 - (Loan amortization) To buy a new house you must...Ch. 5 - Prob. 33SPCh. 5 - Prob. 34SPCh. 5 - Prob. 35SPCh. 5 - Prob. 36SPCh. 5 - Prob. 37SPCh. 5 - (Compound interest uith nonannnal periods) a....Ch. 5 - (Compound interest with nonannual periods) After...Ch. 5 - Prob. 40SPCh. 5 - (Spreadsheet problem) To buy a new house you take...Ch. 5 - (Nonannual compounding using a calculator) Jesse...Ch. 5 - (Nonannual compounding using a calculator)...Ch. 5 - (Nonannual compounding using a calculator) Fords...Ch. 5 - Prob. 45SPCh. 5 - (Nonannual compounding using a calculator) Dennis...Ch. 5 - Prob. 47SPCh. 5 - (Calculating the effective annual rate) Youve just...Ch. 5 - Prob. 49SPCh. 5 - Prob. 50SPCh. 5 - (Present value) The Kumar Corporation is planning...Ch. 5 - (Perpetuities) What is the present value of the...Ch. 5 - (Complex present value) How much do you have to...Ch. 5 - (Complex present value) You would like to have...Ch. 5 - Prob. 55SPCh. 5 - Prob. 56SPCh. 5 - Prob. 57SPCh. 5 - Prob. 58SPCh. 5 - (Present value of a complex stream) Don Draper has...Ch. 5 - (Present value of a complex stream) Don Draper has...Ch. 5 - (Complex stream of cash flows) Roger Sterling has...Ch. 5 - (Future and present value using a calculator) In...Ch. 5 - Prob. 1MCCh. 5 - Prob. 2MCCh. 5 - Prob. 3MCCh. 5 - Prob. 4MCCh. 5 - Prob. 5MCCh. 5 - Prob. 6MCCh. 5 - Prob. 7MCCh. 5 - Prob. 8MCCh. 5 - Prob. 9MCCh. 5 - Prob. 10MCCh. 5 - Prob. 11MC
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- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?arrow_forward(Future value of an annuity) In 7 years you are planning on retiring and buying a house in Oviedo, Florida. The house you are looking at currently costs $100,000 and is expected to increase in value each year at a rate of 4 percent. Assuming you can earn 12 percent annually on your investments, how much must you invest at the end of each of the next 7 years to be able to buy your dream home when you retire? a. If the house you are looking at currently costs $100,000 and is expected to increase in value each year at a rate of 4 percent, what will the value of the house be when you retire in 7 years? $nothing (Round to the nearest cent.)arrow_forwardToday is your birthday and you decide to start saving for your retirement. You will retire on your 65th birthday and will need $70000 per year at the end of each of following 20 years. You will make a first deposit 1 year from today in an account paying 20% interest annually and continue to make an identical deposit each year up to and including the year you plan to retire. If an annual deposit of $6,800 will allow you to reach your goal what birthday are you celebrating today?arrow_forward
- you want to establish an annuity that will pay $7,500 for the next twenty years (end year) your financial institution will establish such an annuity if you deposit $104,000 today. what is the implied rate that the institution is paying on this annuity?arrow_forwardYour insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%. What should be the present value of this annuity? If you are given the first payment immediately starting today, what should be the worth of this annuity? Which payment mode will you accept? What will be basis of your decision under time value of money concept?arrow_forward(Future value of an ordinary annuity) You are graduating from college at the end of this semester and after reading the The Business of Life box in thischapter, you have decided to invest $4,700 at the end of each year into a Roth IRA for the next 40 years. If you earn 8 percent compounded annually on your investment, how much will you have when you retire in 40 years? How much will you have if you wait 10 years before beginning to save and only make 30 payments into your retirement account?arrow_forward
- After retirement, you expect to live for 25 years. You would like to have a $95,000 income each year. The annual interest rate is 9 percent per year. Required: Calculate the amount of savings you have in your retirement account to receive this income. A) Assume that the payments start on the day of your retirement. B) Assume that the payments start one year after the retirement.arrow_forwardTo supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal annual end-of-year deposits into an account paying 8 percent annual interest.a. How large must the annual deposits be to create the $220,000 fund by the end of 42 years?b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the forty-second year?arrow_forward(Solving for PMT of an annuity) To pay for your child's education, you wish to have accumulated $19,000 at the end of 11 years. To do this you plan on depositing an ←equal amount into the bank at the end of each year. If the bank is willing to pay 15 percent compounded annually, how much must you deposit each year to reach your goal? To reach your goal, your annual deposit must be $ (Round to the nearest cent.)arrow_forward
- To supplement your retirement, you estimate that you need to accumulate $290,000 exactly 41 years from today. You plan to make equal, end-of-year deposits into an account paying 8% annual interest. a. How large must the annual deposits be to create the $290,000 fund by the end of 41 years? b. If you can afford to deposit only $800 per year into the account, how much will you have accumulated in 41 years?arrow_forwardYou would like to have enough money saved to receive a growing annuity for 25 years, growing at a rate of 4% per year, the first payment being $60,000 after retirement, so that you and yourfamily can lead a good life. How much would you need to save in your retirement fund toachieve this goal? (assume that the growing perpetuity payments start one year from the date ofyour retirement. The interest rate is 12%)?arrow_forwardDetermine the annual payment required to fund a future annual annuity of $12,000 per year. You will fund this future liability over the next five years, with the first payment to occur one year from today. The future $12,000 liability will last for four years, with the first payment to occur seven years from today. If you can earn 8 percent on this account, how much will you have to deposit each year over the next five years to fund the future liability?arrow_forward
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