Andrew deposit $2 into a fund at time 0. Money in this fund accumulates at an effective annual interest rate of i during the first 5 years, and at an effective annual interest rate of 2i thereafter. This deposit accumulates to 6.18 at the end of 10 years and to 27.47 at the end of 20 years. What is the value of the deposit at the end of 7 years?

Andrew deposit $2 into a fund at time 0. Money in this fund accumulates at an effective annual interest rate of i during the first 5 years, and at an effective annual interest rate of 2i thereafter. This deposit accumulates to 6.18 at the end of 10 years and to 27.47 at the end of 20 years. What is the value of the deposit at the end of 7 years?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 2STP

See similar textbooks

Similar questions

4. John makes deposits of 1,100 at the end of each year for n years into a fund. At time n, he uses the accumulated value of the fund to purchase an annuity immediate that makes payments of 30,102.71 at the end of each year for 15 years. The annual effective interest rate is 13%. Calculate n. a. n = 24 b. n = 26 n = 28 d. n = 20 e. n = 18 نه ن ن ف ق
A trust fund is to be formed by depositing #4766 twice a year for 7 years in a bank that promises to pay a fixed rate over the entire term. If the amount of the fund at the end of the term is #86123, then what is the rate (in %) compounded semi-annually? Round your answer to 2 decimal places.
3. Lauren deposits: ● $240 at the beginning of year 1; $220 at the beginning of year 2; • $100 at the beginning of year 8; I into a fund. Three year after the last deposit, Lauren withdraws the accumulated value of the fund and uses it to buy a perpetuity-immediate with level payments of Z at the end of each year. All calculations assume an annual interest rate of 10%. Calculate Z. Solution:
On January 1, 2018, you deposited $5,500 in a savings account. The account will earn 8 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 7 years? 2. What is the total interest for the 7 years? 3. How much interest revenue did the fund earn in 2018 and in 2019? Show Transcribed Text
Troy Long wishes to deposit a single sum of money in a savings account so that five equal annual withdrawals of $2,000 can be made before depleting the fund. If the first withdrawal is to occur 1 year after the deposit and the fund pays interest at a rate of 5% compounded annually, how much should he deposit? suppose the first withdrawal does not occur until 3 years after the deposit. How much should be deposited?
13. Walrus opens up a savings account on January 1 2024, and here are the series of his transactions over the next two years. Withdrawal Deposit Date 01/01/2024 60000 04/01/2024 07/01/2024 10/01/2024 07/01/2025 30000 10/01/2025 10000 15000 20000 106 48. Find i. 5000 The fund accumulates according to simple interest with an annual effective interest rate of i. By December 31 2025, the fund has accumulated to 41242.
You deposit $600 today into a fund that you intend to leave invested for 6 years. The fund earns 6% interest compounded annually. Indicate the inputs to be entered into the financial calculator keys. What is the value of the fund to be accumulated at the end of year 6? (Round future value answer to two decimal places (e.g., 52.75) and interest rate to one decimal place (e.g., 527.5).) Inputs Calculator N Keys Future value $ 6 I 6 PV 600
A company needs to set aside a fund to meet the following future annuity payments to an individual: £1443 paid at the end of each year for the first 4 years followed by £1441 paid at the end of each year up until year 15 (inclusive). Assuming an effective rate of interest of 6.9% pa throughout the entire period, how much total fund the company needs to hold today in order to meet these payments? Express your answer in £s to 2 decimal places. (correct answer = 13214.59)
A trust notifies you that you are entitled a grant that would give you annual payments of $6,200 per year in perpetuity. The first payment will be made to you three years later (at the end of year 3). The annual interest rate is 10% (APR). What is the present value of the grant? A. 56,363.64 B. 46,581.52 C. 51,239.67 D. 62,000.00
Bill makes deposits of 2,700 at the end of each year for n years into a fund. At time n, he uses the accumulated value of the fund to purchase an annuity immediate that makes payments of 197,909.20 at the end of each year for 5 years. The annual effective interest rate is 15%. Calculate n. O a. 26 O b. 29 O c. 28 O d. 24 O e. 22
You deposited $8,300 in a savings account. The account will earn 8 percent annual compound interest, which will be added to the fund balance at the end of each year. Factors to use for n=10, I =8% (DO NOT USE ANY OTHER FACTORS OR EQUATIONS) Present Value of $1 0.46319Present Value of an Annuity of $1 6.71008 Future Value of $1 2.15892 Future Value of an Annuity of $1 14.48656 What is the total interest earned for the 10 years?
On January 1, 2021, you deposited $6,100 in a savings account. The account will earn 10 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 4 years? (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 2. What is the total interest for the 4 years? (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 3. How much interest revenue did the fund earn in 2021 and in 2022?