4. If you deposit $4,500 at the end of each of the next 30 years into an account paying 7.9 percent interest, how much money will you have in the account in 30 years? How much will you have if you make deposits for 40 years?

4. If you deposit $4,500 at the end of each of the next 30 years into an account paying 7.9 percent interest, how much money will you have in the account in 30 years? How much will you have if you make deposits for 40 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 1P

See similar textbooks

Related questions

Q: Problem 06.027 AW of a Permanent Investment How much must you deposit each year into your retirement…

A: Amount withdrawn per year forever = $85,000Number of years = 30 yearsInterest rate = 10%Number of…

Q: What is meant by stock market efficiency? Name and explain three forms of stock market efficiency.…

A: In this question, we are required to determine:Meaning of stock market efficiencyThree forms of…

Q: When Fund H started on 1/1/21, it had $318,225,000 in assets under management (AUM). The annual…

A: Starting fund value = $318,225,000Cash outflow = $120,204,000Cash inflow = $27,885,000HPR 1 =…

Q: Use the data below to construct the Arms ratio on each of the five trading days. Note: Do not round…

A: Arms ratio- This ratio indicates the relationship between advancing stocks and declining stocks,…

Q: Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two…

A: Payment today = $2,673,000Annual payments = $347,000Number of years =15Effective interest rate =…

Q: Assume Highline Company has just paid an annual dividend of $1.04. Analysts are predicting an 11.5%…

A: The dividend discount model, also known as the dividend growth model, assumes that the present value…

Q: Your retirement fund consists of a $5,000 investment in each of 15 different common stocks. The…

A: A portfolio beta is a measure of the systematic risk or volatility of an investment portfolio…

Q: What is the value of the stock if the current dividend is $1.4, the first-stage growth is 1.4%, the…

A: The share price of the company can be found by using the valuation model, DDM model, etc. As per DDM…

Q: Antonio would like to replace his golf clubs with a custom-measured set. A local sporting goods…

A: The objective of the question is to determine whether Antonio should cash in his Certificate of…

Q: Based on the following table, if you invest $15,000 into AAPL stock at the beginning of the pe what…

A: Return on investment refers to the percentage of earning over the investment, when the investments…

Q: An investment project costs $14,100 and has annual cash flows of $3,200 for six years. a. What is…

A: Cost of investment$14,100Annual cash flow$3,200Number of years6

Q: Problem 9-28 Stock Valuation and Cash Flows Full Boat Manufacturing has projected sales of $116.5…

A: Revenue $ 116.50000Cost $ 68.20000Investment $ 12.60000Tax 23%growth rate14%NO. of…

Q: A client's child will be attending college in 7 years. Assume current tuition and fees are $37, 294,…

A: Current tuition fees = $37,294Rate of return (r) = 9.94% or 0.0994Inflation rate = 1.96% or…

Q: A 5-year bond has a face value of £100. The bond pays coupons semi-annually at a rate of 6%. The…

A: Time to maturity = 5 yearsFace value = £100Coupon rate = 6%Yield = 8%To find: Price of the bond.

Q: addresses the question of where money is raised to finance business activities. O Capital budgeting…

A: The objective of the question is to identify the correct method through which businesses raise money…

Q: Rank these non-mutually exclusive alternatives if other opportunities exist to earn a before-tax…

A: Capital budgeting is the process of dedicating the company's resources to projects that are…

Q: A company wishes to improve efficiency and have 28 days in inventory. If COGS is forecasted as…

A: The average inventory amount can be found by using the inventory turnover ratio where the cost of…

Q: An Indian exporter has entered into a sale transaction of pulses for $20,000 for which the payment…

A: calculation in words:Without Hedging:If the exporter does not hedge, the profit or loss would depend…

Q: Calculate the present value of a perpetuity of $5,000 per year with the first payment 3 years from…

A: The following formula can be used to determine a perpetuity's present value: Present value of…

Q: a. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss…

A: Bonds can trade at a premium, at par, or at a discount, depending on the market conditions for…

Q: Assume there are no investment projects in the economy that yield an expected rate of return of 25…

A: Expected return vs investment:The anticipated yield, or expected return, stands as a pivotal metric…

Q: 4 5 6 7 8 a 9 Purpose of the homework: 1. Students will learn the composition of Dow Jones…

A: The objective of this question is to understand how the Dow Jones Industrial Average (DJIA) is…

Q: Consider an economy with distress costs and corporate tax rates. Consider further a firm with EBIT…

A: The objective of the question is to calculate the optimal leverage ratio (D/V) for a firm in an…

Q: 20 A company is launching a new sales initiative and expects sales of $824,241 during the first…

A: The objective of the question is to calculate the incremental investment in operating net working…

Q: a. What is the value of OPC if it chooses to retire all of its debt and become an unlevered firm?…

A: The value of a company is the addition of all its assets. The Modigliani-Miller proportion with tax…

Q: You deposit $1000 in an account that pays 88% interest compounded semiannually. After 5years, the…

Q: An 11% coupon callable bond with $100 par and maturing in 5 years is yielding 11.60%. The yield to…

A: Coupon rate = 11%Maturity = 5 yearsYTM = 11.60%YTC = 13.10%Call date = 2 yearsCall price =…

Q: OvThe environmental protection agency of a county would like to preserve a piece of land as a…

A: Lump sum payment = $1,000,000Number of years = 20Annual benefits = $100,000Discount rate = 6%To…

Q: Present Value $ 400 2,091 33,105 32,800 Years Interest Rate 12 % 10% 15 % 22 % Future Value $ 1,255…

A: The time value of money is a concept used in finance to evaluate the worth of the cash flows or cash…

Q: Problem 7-33 TIPS Total Return (LG7-2) Consider a 4.50 percent TIPS with an issue CPI reference of…

A: Inflation-adjusted bonds also known as Treasury Inflation-Protected Securities (TIPS) in the United…

Q: 8. a 14% semiannual paying coupon bond has six years to maturity. The Bond is currently trading at…

A: The objective of the question is to calculate the effective duration of a semiannual paying coupon…

Q: On March 1st, Toyota closed at $175,410 per share. One year earlier, one share closed at $198,100.…

A: A company which has its stock listed in a stock exchange will see trading in their shares in the…

Q: A Construction company may buy a new truck with a 10-year life. Interest is 5%. The cash flows for…

A: NPW is the abbreviation used for Net present worth or net benefits after discounting the cash flows…

Q: Dipstick Auto Repairs is selling shares for $42.00 per share and pays a dividend. The projected…

A: Current Share Price (P0) = $42Growth rate (g) = 2.5% or 0.025Required rate of return (r) = 5% or…

Q: A company deposits $3500 in a bank at the end of every year for 12 years. The company makes no…

A: Deposits = d = $3500Number of Deposits = n = 12Time after final deposit = t = 8Interest Rate = r =…

Q: What is the discount rate at which the following cash flows have a NPV of $0? Answer in %, rounding…

A: YearCash flow0-145,000.00135,000.00242,000.00343,000.00430,000.00541,000.00642,000.00

Q: Question 2: Assume the existing one-year risk-free rate is 1.5%, the market risk premium is 2%, the…

A: The probability of repayment can be determined by using the following formula where PD is the…

Q: What would be the expected return of a stock that has a beta of 0.9? 6.5% 7% 7.5% 6%

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Based on economists' forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for…

A: R10.70%E(2r1)1.85%L20.05%E(3r1)1.95%L30.10%E(4r1)2.25%L40.12%

Q: Mr. Hugh Warner is a very cautious businessman. His supplier offers trade credit terms of 2/12 net…

A: 2/12 indicates that there is a 2% discount if the payment is made within 12 days.Net 75 days…

Q: Adriana made two trades in one day with an online brokerage house that charges $9 per trade.…

A: We buy and sell stocks in order to gain from the price changes of the stock. The buying and selling…

Q: The firm you are analyzing has $90 million in face value of convertible debt with a stated interest…

A: Convertible bond:A convertible bond is a financial instrument that possesses a distinctive dual…

Q: You have a 10-year bond, with $1,000 face value, 8.00% coupon rate, semiannual coupon payments, and…

A: The objective of the question is to calculate the price of a bond given its face value, coupon rate,…

Q: A corporation has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a…

A: Weighted average cost of capital of the firm under which the cost related to all sources of…

Q: What are the Finance disciplines that contribute to strategy development? And how it providing…

A: A number of financial disciplines are essential to an organization's strategy formulation process.…

Q: Effect Shares outstanding Retained earnings Shareholder's equity Stock Dividend Increases Decreases…

A: Share repurchase-When a company purchases shares of its own stock from its shareholders, then share…

Q: c-1. Over what range of discount rates would you choose Project A? Note: Do not round intermediate…

A: YearCash flow (A)Cash flow…

Q: The Gecko Company and the Gordon Company are two firms whose business risk is the same but that have…

A: Pretax required return on Gordon's stock can be calculated by using equation below.Pretax return on…

Q: Blossom Hospitalinstalls a new parking lot. The paving cost $29200 and the lights to illuminate the…

A: A fixed asset is a type of long-term asset that is owned by a firm and used for its operations. For…

Q: You currently have $10,000 in your bank account. You will invest this $10,000 and $750 every quarter…

A: For calculation of annual rate of return we need to calculate rate per quarter first. The future…

Question

4. If you deposit $4,500 at the end of each of the next 30 years into an account paying 7.9
percent interest, how much money will you have in the account in 30 years? How much will
you have if you make deposits for 40 years?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Let us first look at the information given in the question

VIEW

Step 2: Calculation of Future Value after 30 years using formula

VIEW

Step 3: Calculation of Future Value after 30 years using Excel

VIEW

Step 4: Calculation of Future Value after 40 years using formula

VIEW

Step 5: Calculation of Future Value after 40 years using Excel

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
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?
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
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
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
Suppose you want to have $700,000 for retirement in 30 years. Your account earns 10% interest. a) How much would you need to deposit in the account each month? $ b) How much interest will you earn? $ es
Suppose you want to have $300,000 for retirement in 30 years. Your account earns 5% interest. a ) How much would you need to deposit in the account each month? $ b) How much interest will you earn?
Suppose you want to have $800,000 for retirement in 25 years. Your account earns 7% interest.a) How much would you need to deposit in the account each month?$b) How much interest will you earn?$