mach year in an investment that pays 4%/a, compounded annually, until her 50 birthday. She ther caves the money in the investment to collect interest at 5%/a compounded semiannually until her birthday. a) Determine how much money she will have on her 65th birthday. b) Penny's best friend, Susan, decides to wait until her 45th birthday to start planning for her- future. Susan can get the same rate of return (4%/a compounded annually) on her investm Find the yearly payment that she would be required to make until 65th birthday so that her investment is equivalent to Penny's investment.

mach year in an investment that pays 4%/a, compounded annually, until her 50 birthday. She ther caves the money in the investment to collect interest at 5%/a compounded semiannually until her birthday. a) Determine how much money she will have on her 65th birthday. b) Penny's best friend, Susan, decides to wait until her 45th birthday to start planning for her- future. Susan can get the same rate of return (4%/a compounded annually) on her investm Find the yearly payment that she would be required to make until 65th birthday so that her investment is equivalent to Penny's investment.

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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Barbara Cartland is scheduled to receive $20,000 in two years. When she receives it, she will invest it for 5 more years, at 8 percent per year. How much money will she have 7 years from now? $44,079.84 $58,773.12 $47,209.19 $36,733.2 $29,386.56
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1. Edna invests $30,000 and buys an annuity that pays $2000 every 6 months (1st payment 6 months from now) for 5 years, followed by $1500 every 6 months for as long as possible. The annuity earns interest at 1 = 6% for the first 3 years, followed by i2) = 5% thereafter. How many semi-annual payments will Sally get in total? What would be the size of her final payment if it is made at the same time as his last regular $1500 payment? What would be the size of her final payment if it is made 6 months after his last regular $1500 payment? (a) (b) (c)
5. Kristie owns a perpetuity which pays $12,000 at the end of each year. She comes to youand offers to sell you all of the payments to be received after the 10th year. What is themaximum amount that you should offer her if the required return is 8%?

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