None Finding nominal rate of return Suppose the effective annual interest rate on some investment is 8.53%.a. What is the stated rate per month?b. Suppose you decide to kick your Starbucks habit to save money. Currently you spend $125.00 per month (about $4 per day) on Starbucks coffee. Without considering the time value of money and assuming Starbucks pricesremain steady, how much will you spend at Starbucks over the next 35 years assuming no change in your monthly spending?c. Now suppose you invest the $125.00 monthly in an account that earns an effective annual return of 8.53%. How much money will you accumulate over 35 years using the funds that you previously spent at Starbucks? Note: assume yourfirst monthly deposit occurs one month from now.a. The stated rate per month is ☐ %. (Round to five decimal places.)

a. What is the monthly stated rate?8.53% is the declared yearly interest rate. We divide the yearly…

Answered: Finding nominal rate of return Suppose…

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

See similar textbooks

Similar questions

Finding nominal rate of return Suppose the effective annual interest rate on some investment is 8.45% a. What is the stated rate per month? b. Suppose you decide to kick your Starbucks habit to save money. Currently you spend $125.00 per month (about $4 per day) on Starbucks coffee. Without considering the time value of money and assuming Starbucks prices remain steady, how much will you spend at Starbucks over the next 45 years assuming no change in your monthly spending? c. Now suppose you invest the $125.00 monthly in an account that earns an effective annual return of 8.45%. How much money will you accumulate over 45 yeans using the funds that you previously spent at Starbucks? Note: assume your first monthly deposit occurs one month from now. a. The stated rate per month is. (Round to five decimal places)
Suppose you want to buy a $143,000 home. You found a bank that offers a 30-year loan at 3.9% APR.A. What will be your monthly payment? (Round to the nearest cent.)B. How much would you end up paying the bank for the home after 30 years? (Round to the nearest cent.)C. Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment? (Round to the nearest cent.) D.How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.) E. How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.)
The price of a car you want is $36,000 today. Its price is expected to increase by $1000 each year. You now have $22,000 in an investment account, which is earning 8% per year. How many years will it be before you have enough to buy the car without borrowing any money? (Use Goal Seek to determine the time taken.) The time taken is determined to be..... years.
Suppose you want to buy a $144,000 home. You found a bank that offers a 30-year loan at 3.3% APR.A. What will be your monthly payment? (Round to the nearest cent.)B. How much would you end up paying the bank in total for the home after 30 years? (Round to the nearest cent.)C.Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment (assume the same interest rate)? (Round to the nearest cent.)D. How much would you end up paying the bank in total for the home after 25 years? (Round to the nearest cent.)E. How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.)
You started an investment account 10 years ago with $2100, and it now has grown to $8900. a. What annual rate of return have you earned (you have made no additional contributions to the account)? b. If the investment account earns 11% per year from now on, what will the account's value be ten years from now? a. The annual rate of return is%. (Round to two decimal places.) View an example Get more help - Clear all
You want to set up a Boba Tea house and run for 4 years. For your financial analysis purpose, you estimate an initial investment and an annual free cash flow. Your initial investment will be 0. Your annual free cash flow from operation will be $30,000 (at the end of each year) for the next 4 years. What is a value of the Boba Tea house (present value calculation)? Here we assume a discount rate is 8%.
Suppose you invest $120 a month for 8 years into an account earning 10% compounded monthly. After 8 years, you leave the money, without making additional deposits, in the account for another 30 years. How much will you have in the end? $ Suppose instead you didn't invest anything for the first 8 years, then deposited $120 a month for 30 years into an account earning 10% compounded monthly. How much will you have in the end? s
Question 1. Suppose that you invest P dollars at the beginning of every week. However, your crazy banker decides to compound interest at a rate r at the end of Week 5, Week 9, Week 12, Week 14, and Week 15. What is the value of the account at the end of Week 15? At the end of the Week 15, you need to spend $15, 000 on a bandersnatch. How much money must you invest weekly to ensure you have exactly $15, 000 after Week 15 if the weekly interest rate is 10%?
Using the BA II Plus how do I find the solution to The Humpty Dumpty Food Store will be setting aside 35,000 each quarter starting next quarter, for the next four years. How much money will the firm have in four years if it can earn 6.25 % on its savings?
Suppose you want to buy a $159,000 home. You found a bank that offers a 30-year loan at 3.3% APR. What will be your monthly payment? (Round to the nearest cent.) How much would you end up paying the bank for the home after 30 years? (Round to the nearest cent.) $ Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment? (Round to the nearest cent.) $ How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.) $ How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.) $
You are considering purchasing a car in 4 years, anticipating a purchase price of $40,000. a. How much do you need to deposit in an account today, if you want to have $40,000 in the account in 4 years, assuming the account earns 5% annual interest rate? (Assume annual compounding)b. If you deposit $30,000 in the account today, what rate of interest would you need to earn annually in order to have exactly $40,000 in the account in 4 years? (Assume annual compounding)c. If your account earns 0.25% of interest every month, and if you make an initial deposit of $10,000 today, how much do you need to deposit every month in your account in order to have exactly $40,000 in 4 years? (Assume monthly compounding)
Assume you just deposited $1,000 into a bank account. The current real interest rate is 2% and inflation is expected to be 6% over the next year. What nominal interest rate would you require from the bank over the next year? How much money will you have at the end of one year? If you are saving to buy a stereo that currently sells for $1,050, will you have enough to buy it?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS