For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use. (PV of S1, FV of S1, PVA of S1, and FVA of S1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $20,000 for a trip you wish to take in five years. You are able to earn 6% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for five years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 35 years with savings in excess of $1,200,000. You expect to save $3,800 a year for 35 years and earn an annual rate of interest of 9%. c-2. Will you be able to retire with more than $1,200,000 in 35 years? d-1. A sweepstakes agency names you a grand prize winner. You can take $225,000 immediately or elect to receive annual installments of $39,000 for 30 years. You can earn 9% annually on any investments you make. d-2. Which prize do you choose to receive?
For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use. (PV of S1, FV of S1, PVA of S1, and FVA of S1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to accumulate $20,000 for a trip you wish to take in five years. You are able to earn 6% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for five years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? 1. You want to retire after working 35 years with savings in excess of $1,200,000. You expect to save $3,800 a year for 35 years and earn an annual rate of interest of 9%. c-2. Will you be able to retire with more than $1,200,000 in 35 years? d-1. A sweepstakes agency names you a grand prize winner. You can take $225,000 immediately or elect to receive annual installments of $39,000 for 30 years. You can earn 9% annually on any investments you make. d-2. Which prize do you choose to receive?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem),
and (3) the interest rate and time periods you would use. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Round "Table Factors" to 4 decimal places. a. You need to
accumulate $20,000 for a trip you wish to take in five years. You are able to earn 6% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for five years. How would
you determine the amount of the one - time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual
deposit? 1. You want to retire after working 35 years with savings in excess of $1,200, 000. You expect to save $3,800 a year for 35 years and earn an annual rate of interest of 9 %. c-2. Will you be able to retire with
more than $1,200,000 in 35 years? d-1. A sweepstakes agency names you a grand prize winner. You can take $225,000 immediately or elect to receive annual installments of $39,000 for 30 years. You can earn 9%
annually on any investments you make. d-2. Which prize do you choose to receive?
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