Required Lump-Sum PaymentTo complete your last year in business school and then go through law school, you will need $5,000 per year for 4 years, starting nextyear (that is, you will need to withdraw the first $5,000 one year from today). Your uncle offers to put you through school, and he willdeposit in a bank paying 8.5% interest a sum of money that is sufficient to provide the four payments of $5,000 each. His deposit willbe made today. Do not round intermediate calculations. Round your answers to the nearest cent. If your answer is zero, enter "0".a. How large must the deposit be?$16,377.98b. How much will be in the account immediately after you make the first withdrawal? After the last withdrawal?After the first withdrawal: $After the last withdrawal: $0

Present value is the equivalent value of money required today based on the time value of money and…

Answered: complete your last year in business…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 2STP

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Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of 50 (1 payment at the end of each of the next 4 years) plus an extra payment of 1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of 900 each. Your money is now invested in a bank that pays an 8% nominal (quoted) interest rate but with quarterly compounding. You regard the securities as being just as safe, and as liquid, as your bank deposit, so your required effective annual rate of return on the securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their present value to you?
Required Lump-Sum Payment To complete your last year in business school and then go through law school, you will need $5,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $5,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 7.43% interest a sum of money that is sufficient to provide the 4 payments of $5,000 each. His deposit will be made today. How large must the deposit be? Round your answer to the nearest cent. How much will be in the account immediately after you make the first withdrawal? Round your answer to the nearest cent.3. How much will be in the account immediately after you make the last withdrawal? Round your answer to the nearest cent. Enter "0" if required
Required Lump-Sum Payment To complete your last year in business school and then go through law school, you will need $30,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $30,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 8.5% interest a sum of money that is sufficient to provide the 4 payments of $30,000 each. His deposit will be made today. Do not round intermediate calculations. Round your answers to the nearest cent. If your answer is zero, enter "0". a. How large must the deposit be? $ b. How much will be in the account immediately after you make the first withdrawal? How much will be in the account immediately after you make the last withdrawal? LA
Starting next year, you will need $5,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $5,000.) Your uncle deposits an amount today in a bank paying 7% annual interest, which will provide the needed $5,000 payments. How large must the deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much will be in the account immediately after you make the first withdrawal? Do not round intermediate calculations. Round your answer to the nearest cent.
To help you reach a $16,000 goal 8 years fromnow, your father offers to give you $4,000 now.You plan to get a part-time job and make five additional deposits, one at the end of each year. (The firstdeposit is made at the end of the first year.) If all yourmoney is deposited in a bank that pays 6% interest,how large must your annual deposit be?
Starting next year, you will need $5,000 annually for 4years to complete your education. (One year from today you will withdraw the first $5,000.)Your uncle deposits an amount today in a bank paying 6% annual interest, which will providethe needed $5,000 payments.a. How large must the deposit be?b. How much will be in the account immediately after you make the first withdrawal?
Suppose that you are obtaining a personal loan from your uncle in the amount of $20,000 (now) to be repaid in two years to cover some of your college expenses. If your uncle usually earns minimum 8% profit (annually) on his money, which is invested in various sources, what minimum lump-sum payment two years from now would make your uncle happy?
You are about to graduate from blank but you still owe $12,000 for tuition. blank offers you the following deal: Pay a "small amount" now and then pay $2,000 every 6 months for the next 3 years. If you are being charged an annual interest fee of 6% on your balance how much is the initial "small amount"?
Your parents are giving you $100 a month for four years while you are in college. At a 6% annual discount rate, what are these payments worth to you when you first start college? (show steps, Answer: $4,258.03)
You need P4,000 per year for four years to go to college. Your father invested P5, 000 in 7% account for your education when you were born. If you withdraw P4, 00 0 at the end of your 17th, 18th, 19th and 20th birthday, how much will be left in the account at the end of the 21st year?
A student plan to deposit $2,000 in the bank now and another $4,000 for the next 3 years. If he plans to withdraw $6,000 two years from after his last deposit for the purpose for buying shoes, what will be the amount of money left in the bank after one year of his with withdrawal? effective annual interest rate is 8%?
You decide that you need $47,000 in 3 years to make a down payment on a house. You plan to make annual fixed deposits to achieve your goal. If the interest rate is 2.5%, how much should be deposited each time? Hint use the Financial Function “PMT” to solve for the payment, and PV will be zero. You owe $25,000 to your parents. You promise to make 10 annual payments of $3,000 to settle your debt. What interest rate are your parents charging (estimated up to 2 decimal places), if you make the 10 annual payments beginning one year from now? Hint use the Financial Function “RATE”. Note if you need help use the “Help on this function” feature. This help will include an example for you to follow. You are offered an investment that will pay $14,000 per year for 17 years, beginning one year from now. If you feel that the appropriate discount rate is 3.4%, what is the investment worth to you today? Your grandparents offered you some money via the following options. Assuming an annual interest…

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