n the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. You and your new spouse each bring home $1500 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.76% compounded monthly. How long will it take to have enough for a 20% down payment on a $155,000 condo in the city? (Round your answer to two decimal places.)

n the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. You and your new spouse each bring home $1500 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.76% compounded monthly. How long will it take to have enough for a 20% down payment on a $155,000 condo in the city? (Round your answer to two decimal places.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

See similar textbooks

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. You and your new spouse each bring home $1600 each month after taxes and other payroll deductions. By living frugally, you intend to live on just one paycheck and save the other in a mutual fund yielding 7.74% compounded monthly. How long will it take to have enough for a 20% down payment on a $175,000 condo in the city? (Round your answer to two decimal places.)
Suppose that for retirement purposes, over the course of 27 years, you make monthly deposits of $480.00 into an ordinary annuity that pays an annual interest rate of 4.954% compounded monthly. After those 27 years, you then want to make monthly withdrawals for 28 years, reducing the balance in the account to zero dollars. a) Find the amount of money you have accumulated in the annuity over the first 27 years: b) How much should you withdrawing monthly from your account so that the balance reaches zero dollars after the final 28 years? (Note: Your answers should have a dollar sign and be accurate to two decimal places)
Jean-Rene wants to make a lump-sum deposit today such that at the end of every three months for the next five years he can receive a payment starting at $2,500 and increasing by 1% each time thereafter. At the end of the term, an additional lump-sum payment of $10,000 is required. If the annuity can earn 8.75% compounded semi-annually, what lump sum should he deposit today? Using financial Calculator.
Suppose that you would like to have $25,000 to use as a down payment for a home in five years by making regular deposits at the end of every three months in an annuity that pays 7.25% compounded quarterly. Determine the amount of each deposit. Round up to the nearest dollar. How much of the $25,000 comes from deposits and how much comes from interest?
Find the future value of each using the future value of an ordinary annuity formula. Priscilla deposits $200 at the end of each month for seven years into a savings accountearning 5% compounded monthly. How much does she have in the account after seven years? Conniedeposits $2,000 at the end of eachyear into her Individual Retirement Account (IRA). It earns 8% compounded annually. How much will Connie have after twenty years? 13. David wants to retire in forty years. If he puts away $300per quarter, at the end of each quarter, into an account earning 5.5% compounded quarterly,how much will he have when he retires?
Randall will make deposits of $3,130 at the end of every year into an account earning 3.29 % compounded monthly for the next 29 years. What type of annuity is Randall using? O Perpetuity O Not an Annuity O Simple Annuity Due O Ordinary Simple Annuity O General Annuity Due O Ordinary General Annuity
As part of your retirement plan, you have decided to deposit $6,000 at the beginning of each year into an account paying 5% interest compounded annually. (Round your answers to the nearest cent.) Use the future value of an annuity due formula to calculate how much (in $) you would have in the account after 30 years if the bank in part (d) switched from annual compounding to monthly compounding and you deposited $500 at the beginning of each month instead of $6,000 at the beginning of each year.
Dean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He wishes to receive a payout of $1,700 per month for twenty five years. His money earns 7.3% interest compounded monthly. (Round your answers to the nearest cent.) (a) How large a monthly payment must Dean Gooch make if he saves for his payout annuity with an ordinary annuity, which he sets up thirty years before his retirement? (The two annuities pay the same interest rate.) (b) How large a monthly payment must he make if he set the ordinary annuity up twenty years before his retirement?
Dean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He wishes to receive a payout of $1,500 per month for twenty-five years. (a) How much money must he deposit if his money earns 7.3% interest compounded monthly? (Round your answer to the nearest cent.) (b) Find the total amount that Dean will receive from his payout annuity.
It is estimated that you will pay about $80,000 into the Social Security system (FICA) over your 40-year work span. For simplicity, assume this is an annuity of $2,000 per year, starting with your 26th birthday and continuing through your 65th birthday. Solve, a. What is the future equivalent worth of your Social Security savings when you retire at age 65 if the government’s interest rate is 6% per year? b. What annual withdrawal can you make if you expect to live 20 years in retirement? Let i= 6% per year.