A person deposits $2,000 in an account each year for five years (starting at the end of year one). At the end of the fifth year, one-half of the account balance is withdrawn; $4,000 is deposited annually for five more years (starting in the 6th year), with the total balance withdrawn at the end of the fifteenth year. There are no additional payments in years 11-15. a. Choose the correct cash flow diagram. b. If the account earns interest at the rate of 3% per year, how much is withdrawn at the end of five years? c. If the account continues to earn interest at the rate of 3% per year, how much is withdrawn at the end of 15 years? Click the icon to view the interest and annuity table for discrete compounding when i = 3% per year. O C. F5/2 2 3 45 2K 2K 2K 2K 2K 4K 4K 4K 4K 4K 6 7 8 9 10 11 12 13 14 15 F6/2 3 4 56 2K 2K 2K 2K 2K F15 1 4K 4K 4K 4K 4K F15 7 8 9 10 11 12 13 14 15 Q Q Q O D. F5/5 3 45 2K 2K 2K 2K 2K 2K 2K 2K 2K 2K 6 7 8 9 10 11 12 13 14 15 4K 4K 4K 4K 4K 4K 4K 4K 4K 4K F15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 F5/2 F15 Q Q G

A person deposits $2,000 in an account each year for five years (starting at the end of year one). At the end of the fifth year, one-half of the account balance is withdrawn; $4,000 is deposited annually for five more years (starting in the 6th year), with the total balance withdrawn at the end of the fifteenth year. There are no additional payments in years 11-15. a. Choose the correct cash flow diagram. b. If the account earns interest at the rate of 3% per year, how much is withdrawn at the end of five years? c. If the account continues to earn interest at the rate of 3% per year, how much is withdrawn at the end of 15 years? Click the icon to view the interest and annuity table for discrete compounding when i = 3% per year. O C. F5/2 2 3 45 2K 2K 2K 2K 2K 4K 4K 4K 4K 4K 6 7 8 9 10 11 12 13 14 15 F6/2 3 4 56 2K 2K 2K 2K 2K F15 1 4K 4K 4K 4K 4K F15 7 8 9 10 11 12 13 14 15 Q Q Q O D. F5/5 3 45 2K 2K 2K 2K 2K 2K 2K 2K 2K 2K 6 7 8 9 10 11 12 13 14 15 4K 4K 4K 4K 4K 4K 4K 4K 4K 4K F15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 F5/2 F15 Q Q G

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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Suppose you receive $190 at the end of each year for the next three years. a. If the interest rate is 7%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 7% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)?
A person deposits $150 per month into a savings account for 2 years. If $75 is withdrawn in months 5, 7 and 8 (in addition to the deposits), construct the cash flow diagram to determine how much will be in the account after 2 years at i = 8% per year, compounded quarterly. Assume there is no interperiod interest. $4,050 $3,609 $3,090 $2,045
There is no interperiod compounding for the transactions shown. Your manager asks you to determine the amount of money in the account at the end of year 3 at an interest rate of 8% per year compounded semiannually. Draw the cash flow diagram and solve using (a) tabulated factors, and (b) a spreadsheet.
A person deposits $100 per month into a savings account for 2 years. If $75 is withdrawn in months 5, 7 and 8 (in addition to the deposits), construct the cash flow diagram to determine how much will be in the account after 2 years ati= 8% per year, compounded quarterly. Assume there is no interperiod interest.
On the first day of the year, a man deposits ₱1,000 in a bank at 8% per year compounded annually. He withdraws ₱80 at the end of the first year, ₱90 at the end of the second year, and the remaining balance at the end of the third year. a. How much does he withdraw at the end of the third year? b. What is the net cash flow? c.How much better off, in terms of net cash flow, would he have been if he had not made the withdrawals at the ends of years one and two?
Assume you deposit $4,400 at the end of each year into an account paying 10.5 percent interest. a. How much money will you have in the account in 24 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much will you have if you make deposits for 48 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
On the first day of the year, a man deposits ₱1,000 in a bank at 8% per year compounded annually. He withdraws ₱80 at the end of the first year, ₱90 at the end of the second year, and the remaining balance at the end of the third year. What is the net cash flow?
Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what is the present value of these cash flows? The present value of these cash flows is $ |. (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $ (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)?…
Find the equivalent present worth of the cash receipts in the accompanyingdiagram, where i = 8% compounded annually. In other words, how much doyou have to deposit now (with the second deposit in the amount of $600 at the end of the first year) so that you will be able to withdraw $300 at the end of the second year through the fourth year, and $800 at the end of the fifth year, where the bank pays you 8% annual interest on your balance?
1. Jose Lopez has $15,000 in a 6-year certificate of deposit (CD) that pays a guaranteed annual rate of 4%. Draw a timeline showing when the cash flows will occur.
Assume you deposit $4,200 at the end of each year into an account paying 10 percent interest. a. How much money will you have in the account in 22 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much will you have if you make deposits for 44 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Future value b. Future value
Q1) A man deposited $10,000 in a bank saving account that pays X % / year compounded monthly. He withdraw his money in five equal ends of year withdrawals starting at the end of the first year. Each withdrawal equals $3,000. Determine: 1) Effective Interest Rate per year (i) 2) Nominal Interest Rate per year (X) 3) Effective interest rate per month 4) Effective interest rate per six months

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