Bud Jett (get it…like budget) has two options for an investment. a. OPTION 1 – Invest $2,000 per month for 20 years at the beginning of each year and earn 8% annually. b. OPTION 2 – Invest $2,000 per month for 20 years at the end of each year and earn 8% annually. Calculate both options and select which investment is better for our financial cartoon friend: Bud Jett.
Q: you are planning for a very early retirement. you would like to retire at age 40 and have enough…
A: You need $235,000 each year for 40 years. Present value for $235,000 for 40 years at 10% can be…
Q: You are planning for a very early retirement. You would like to retire at age 40 and have enough…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: How much must you put away at the end of each year
A: An Annuity is a series of payments of fixed amounts and at fixed intervals. These can be of two…
Q: Suppose someone wants to accumulate $40,000 for a college fund over the next 15 years. Determine…
A: Given, The required amount is $40000. Term is 15 years
Q: 36)You are saving for the college education of your two children. One child will enter college in 5…
A: Given that: There are two children, one will enter in college in 5 years another in 7 years Cost of…
Q: An instructor plans to retire in exactly one year and want an account that will pay him P25,000 a…
A: The instructor is planning to retire in one year and wants to get P25000 each year for 15 years. The…
Q: Putting exactly an equal amount of money into ANZ Investment Fund at the end of each month for 15…
A: The future value of an annuity due is the future worth of a series of cash flows received at the…
Q: You need to save aside $320,000 for your retirement plan 10 years from now. You have a saving of…
A: Equated Monthly Installments are one part of the equally divided monthly outgoes to clear off an…
Q: You are saving for the college education of your two children. One child will enter college in 5…
A: Present value of annuity formula along with future value of annuity formula is used to calculated…
Q: ou would like to start saving for retirement. Assuming you are now 20 years old and you want to…
A: The future value function or concept can be used to determine the future value of a present sum or…
Q: Suppose you have three goals in your financial planning for saving money. First, you would like lo…
A:
Q: Present value: Tracy Chapman is saving to buy a house in five years. She plans to put 20 percent…
A: The calculation of invetment amount is shown below:
Q: How much more will you have in your RRSP 30 years from now if you start to contribute $1000 per year…
A: The payments made constantly without any uneven time gap are called annuity where nominal amount for…
Q: Megan Berry, a freshman horticulture major at the University of Minnesota, has some financial…
A: The future value of the annuity is the future worth of a cash flow series at a certain rate of…
Q: Consider the two savings plans below. Compare the balances in each plan after 12 years. Which person…
A: Time Period is 12 years Deposits of Yolanda is $350 per month Deposits of Zach is $4,200 per year…
Q: You are starting a new job, and have the option to start a new retirement plan. Your goal is to have…
A: Annuity refers to series of annual payment which are paid or received at start or end of specific…
Q: 2. You have just turned 30 years old, have just received your MBA, and have accepted your first job.…
A: The future value and present values of annuites and growing annuities: An annuity is a fixed cash…
Q: Today, you have $30,000 to invest. Two investment alternatives are available to you. One would…
A: Cost of capital=14% Present value cash flow =10000/(1.14)+10000/(1.14)^2 +10000/(1.14)^3…
Q: Oshri is planning on his retirement, so he is setting up a payout annuity with his bank. He is now…
A: given infromation present age = 30 years and he wants to retire when he is 60 interest rate =…
Q: You are planning for a very early retirement. You would like to retire at age 40 and have enough…
A: In order to determine the Amount of Investment that a person needs to make each year for 10 years…
Q: Solve the question: You have been offered a project paying $300 at the beginning of each year for…
A: Given Information: Payment Per year(PMT) is $300 Expected rate of return is 9% Time Period is 20…
Q: Warren buffet decides to endow an annual investment symposium at DePaul starting next year and…
A: Symposium Cost =$15000 Annual Investment = Let A Continue forever Interest Rate (i)=5%
Q: Youngs want to know the cost of college education for the two children so that they can approach…
A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: MODE = ?, N = ?, I/Y = ?, PV = ?, PMT = ?, FV = ? You are currently 25 years old. You have developed…
A: Currently at 25 years old. There are 2 things in the given question Amount required at 40 = $ 50,000…
Q: Denise has just set up an investment plan that would fulfill her life-long dream of buying a brand…
A: Effective annual rate of return Effective annual rate of return is the true rate on an investment…
Q: 36)You are saving for the college education of your two children. One child will enter college in 5…
A: An investment is a commodity or object purchased with the intention of earning money or increasing…
Q: You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two…
A: The current worth of the cash flows or an asset after discounting is termed as the present value.
Q: You have been offered a project paying $300 at the beginning of each year for the next 20 years.…
A: Annual payment (P) = $300 Interest rate (r) = 9% Period (n) = 20 Years
Q: You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two…
A: Here the given rate is APR and as it is compounded monthly we need to find the EAR. EAR =…
Q: A client wants to save $ 20,000 for a year starting from January at an initial effective rate of…
A: The Total Net Assets: The total net assets are usually defined as the net of total assets (current…
Q: Three students have each saved $1,000. Each hasan investment opportunity in which he or she…
A: Time value of money- It is based on the concept that money earned today is worth more than similar…
Q: f the price of attending Big Benefits University is $8,000 a year for tuition, fees, books, and and…
A: a. Calculation of Marginal cost of attending university Cost of attending University is ($8000 +…
Q: Four years ago Jonathan had started his saving for his dream holiday in Hawai by putting a lump sum…
A: We will use the concept of time value of money here. As per the concept of time value of money the…
Q: Suppose you're fresh out of college and have a new job where you're able, by being frugal, to put…
A: Time Value of Money states that a dollar today is worth more than a dollar later because it has…
Q: Using the time value of money You are planning for an early retirement. You would like to retire at…
A:
Q: Jamie Lee and Ross agree that by accomplishing their short goals, they can budget $5,000 a year…
A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…
Q: A college savings education plan claims that had you invested $375 per month in the plan for the…
A: The accumulated value at the end of 16 year consist accumulated value of all individual monthly…
Q: As an engineer, you plan to put aside 20% of your yearly income. You expect to make Php1 million in…
A: The question is based on the concept of future value of money which says that future value of money…
Q: Using the Budget method. Your annual family expenses are $90,000 annually. You figured that you need…
A: PVA stands for Process Value Analysis , it is an examination of a internal process. The motive is to…
Q: You want to invest in a new small business venture. If you invest $10,000, you have a guaranteed…
A: Cash Outflow at Year 0 = $10,000 Cash Outflow at Year 1 = $850 Cash Outflow at Year 2 = $1,200 Cash…
(Question #5) Bud Jett (get it…like budget) has two options for an investment.
a. OPTION 1 – Invest $2,000 per month for 20 years at the beginning of each year and earn 8% annually.
b. OPTION 2 – Invest $2,000 per month for 20 years at the end of each year and earn 8% annually.
Calculate both options and select which investment is better for our financial cartoon friend: Bud Jett.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- An investment will generate $12,000 a year for 30 years. If you can earn 12 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 9 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?An investment will generate $9,000 a year for 20 years. If you can earn 9 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 5 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?-Select-YesNoSuppose someone wants to accumulate $55,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $60 per month into an account with an APR of 7%. Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. A. No, because the amount that will be in the college fund, $enter your response here, is less than the goal of $55,000. B. Yes, because the amount that will be in the college fund, $enter your response here, is more than the goal of $55,000.
- Suppose someone wants to accumulate $40,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $200 per month into an account with an APR of 8%. Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) OA. Yes, because the amount that will be in the college fund, S OB. No, because the amount that will be in the college fund, S is more than the goal of $40,000. is less than the goal of $40,000.K Suppose someone wants to accumulate $65,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $55 per month into an account with an APR of 7%. ... Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) O A. No, because the amount that will be in the college fund, $ is less than the goal of $65,000. OB. Yes, because the amount that will be in the college fund, $ is more than the goal of $65,000. 3Answer these essay questions. Be sure to show your work. Calculating Future Values 1. You have $35,000 you want to invest for the next 20 years to help with retirement. An investment plan is presented with a 9% payout over the first 10 years, followed by a 15% payout for the final 10 years. What is the total at the end of the full 20 years? Share how your calculations. Would the amount be different if it paid you 15% per year for the first 10 years and 9% per year for the next 10 years? Explain why or why not? 2. Finding the time necessary until you pay off a loan is simple if you make equal payments each month. However, when paying off credit cards many individuals only make the minimum monthly payment, which is generally 1% to 2% of the balance or $25 whichever is greater. Locate the credit card calculator at www.fincalc.com and work out this exercise: a) You currently owe $25,000 on a credit card with a 16% interest rate and a minimum payment of $25 or 1% of your balance. b) How…
- Manny Kurr is considering the purchase of a beauty salon. The initial cost of this purchase is $16,000. The after-tax cash flows from this investment should be $4,000 per year for the next 5 years. His opportunity cost of capital is 10 percent. Calculate the following:a. Payback—Should Manny buy the beauty salon based on payback if hisrequired payback is less than 3 years?b. The present value of the benefits (PVB),c. The present value of the costs (PVC),d. The net present value (NPV )—Should Manny buy the beauty salon based on NPV rules?e. Profitability index (PI )—what does the profitability index mean in terms of buying the beauty salon?f. Internal rate of return (IRR), (Hint: Use interpolation)—should Manny buythe beauty salon based on IRR rules?g. Accounting rate of return (ARR)—Should Manny buy the beauty salon based on the ARR? (please answer e,f, & g)2. You plan to purchase an office space in Chamblee's Chinatown for $50,000 at the end of year 2021. You estimate that by renting out that office space, you will receive a stream of rental income for the coming eight years at the end of each year as shown in below. After eight years, you estimate that you can still sell the office space for $45,000 at the end of the eighth year. Is this project a good investment if you project that the normal rate of return in this line of business is 12%? How about if the general rate of return is 15% ? 8%? Year 1 $6,000 Year 5 $7,500 Year 2 $6,500 Year 6 $8,500 Year 3 $7,000 Year 7 $8,500 Year 4 $7,500 Year 8 $8,500 3. Based on the information provided in Step 2 above, compute the Internal Rate of Return for the investment. 4. While you were waiting for your first job interview results to come, you spent several dollars to buy a Georgia Educational Lotto and were lucky enough to win a $1 million prize. The prize is to be awarded in 20 annual payments…* Suppose someone wants to accumulate $65,000 for a college fund over the next 15 years. Determine whether the following investment plans will allow the person to reach the goal. Assume the compounding and payment periods are the same. The person deposits $120 per month into an account with an APR of 5%. Will the person meet the goal? Select the correct choice below and fill in the answer box to complete your choice. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) OA. No, because the amount that will be in the college fund, $ B. Yes, because the amount that will be in the college fund, $ is less than the goal of $65,000. " is more than the goal of $65,000. "
- Your younger sibling asks you to borrow $20. You, a smart financial professional, agree but also charge interest on the $20. You plan to collect $5 from your sibling each week for 8 weeks to repay the initial loan. What is the NPV of this project, assuming you invest the $5 at 12%? a. $4.84 b. $2.11 c. $0 d. $6.88An investment promises to pay $5,000 at the end of each year for the next four years and $3,000 at the end of each year for years 5 through 8. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 9 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$ Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 9 percent required rate of return?$You have started an investment club with your friend. You identified an account which you think will pay 8% per year. You are going to invest $1200 per year. Your friend is going to invest $100 per month. You plan to invest for 4 years. All else equal, which of the following is true. Select one: a. Your investment will have the higher future value. b. Both investments will have the same future value c. Your friend’s investment will have the higher future value.