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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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John Longwaite will receive 100,000 in 50 years. His friends are very jealous of him. If the funds are discounted back at a rate of 14 percent, what is the percent , what is the
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- Kirk Van Houten, who has been married for 21 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $13,000 in 9 years. Kirk currently has $4,483 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring?arrow_forwardFrancis wants to start a foundation that will pay its beneficiaries $64,000 per year forever, with the first cash flow occurring one year from today. If the funds will be invested to earn 7% per year, how much must Frank donate today? Enter your answer as a positive number rounded to the nearest penny.arrow_forwardKirk Van Houten, who has been married for 21years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $12,000 in 9 years. Kirk currently has $4,591 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring? The annual rate of return Kirk must earn on his investment to accumulate enough money to pay for the ring isarrow_forward
- Your sister turned 35 today, and she is planning to save $60,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund that's expected to provide a return of 7.5% per year. She plans to retire 30 years from today, when she turns 65, and she expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can she spend each year after she retires? Her first withdrawal will be made at the end of her first retirement year. a. $266,770.46 b. $556,561.79 c. $598,303.93 d. $517,731.90 e. $248,158.57arrow_forwardAre annuities good investments? To answer this question, consider the situation of John. He is 50 years old and can purchase a lifetime annuity for $100,000. The annuity pays John $8,000 per year for the rest of his life. If John lives to be 85, what rate of return will he earn on this investment? What if John only lives to be 77? If John lives to age 85, his IRR is If John lives to age 77, his IRR is ... % per year. (Round to two decimal places.) % per year. (Round to two decimal places.)arrow_forwardTom was trying to determine the best way to save for his retirement. He was selecting between two plans and reasoned that they would provide him the same yield at the end of the terms. Plan A: Deposit $250 per month at 8% annual interest, compounded monthly, for 20 years. Plan B: Deposit $500 per month at 8% annual interest, compounded monthly, for 10 years. Is Tom correct? If not, which plan would provide him the larger annuity? Select the correct answer below: Yes, Tom is correct. Since he is doubling his monthly payment, he can cut the investment time by half. The same amount is deposited either way. No. Plan A will provide a larger savings since there is more time for compound interest to take effect. No. Plan B will provide a larger savings since he is depositing more each month, there is a larger principal for interest to be compounded upon. There is not enough information to determine the answer.arrow_forward
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