ompute the value for each of the following independent situations. Hote: Use Excel or a financial calculator. Round your answers to 2 decimal places. 1. To save for their new child's college education, a couple places $26,800 in an account. What amount will accumulate in the account at the end of 18 years, assuming an interest rate of 7.25% compounded annually? 2. An individual has just inherited a piece of land. The individual plans to hold the land for three years and then expects the land to sell for $204,500. What is the value today of inheriting the land, assuming an interest rate of 8.5% compounded annually? 3. To save money for the down payment on a house, an individual places $5,900 in an account at the end of each quarter. What amount will accumulate in the account at the end of four years, assuming an interest rate of 9.75% compounded quarterly? 4. To purchase a car, an individual agrees to pay $980 at the end of each month for the next six years. What is the cost of the car today, assuming an interest rate of 6.5%. 5. To help repay debt that will come due in 12 years, a company places $23,600 in an account at the beginning of each six-month period. What amount will accumulate in the account at the end of 12 years, assuming an interest rate of 4.5% compounded semiannually? 6. To rent office space, a company signs a lease agreeing to pay $3,400 at the beginning of each month for the next three years. What is the cost today of the lease, assuming an interest rate of 5% compounded monthly? 1. Future Value 2. Present Valun
ompute the value for each of the following independent situations. Hote: Use Excel or a financial calculator. Round your answers to 2 decimal places. 1. To save for their new child's college education, a couple places $26,800 in an account. What amount will accumulate in the account at the end of 18 years, assuming an interest rate of 7.25% compounded annually? 2. An individual has just inherited a piece of land. The individual plans to hold the land for three years and then expects the land to sell for $204,500. What is the value today of inheriting the land, assuming an interest rate of 8.5% compounded annually? 3. To save money for the down payment on a house, an individual places $5,900 in an account at the end of each quarter. What amount will accumulate in the account at the end of four years, assuming an interest rate of 9.75% compounded quarterly? 4. To purchase a car, an individual agrees to pay $980 at the end of each month for the next six years. What is the cost of the car today, assuming an interest rate of 6.5%. 5. To help repay debt that will come due in 12 years, a company places $23,600 in an account at the beginning of each six-month period. What amount will accumulate in the account at the end of 12 years, assuming an interest rate of 4.5% compounded semiannually? 6. To rent office space, a company signs a lease agreeing to pay $3,400 at the beginning of each month for the next three years. What is the cost today of the lease, assuming an interest rate of 5% compounded monthly? 1. Future Value 2. Present Valun
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:Compute the value for each of the following independent situations.
Note: Use Excel or a financial calculator. Round your answers to 2 decimal places.
1. To save for their new child's college education, a couple places $26,800 in an account. What amount will accumulate in the
account at the end of 18 years, assuming an interest rate of 7.25% compounded annually?
2. An individual has just inherited a piece of land. The individual plans to hold the land for three years and then expects the land to
sell for $204,500. What is the value today of inheriting the land, assuming an interest rate of 8.5% compounded annually?
3. To save money for the down payment on a house, an individual places $5,900 in an account at the end of each quarter. What
amount will accumulate in the account at the end of four years, assuming an interest rate of 9.75% compounded quarterly?
4. To purchase a car, an individual agrees to pay $980 at the end of each month for the next six years. What is the cost of the car
today, assuming an interest rate of 6.5%.
5. To help repay debt that will come due in 12 years, a company places $23,600 in an account at the beginning of each six-month
period. What amount will accumulate in the account at the end of 12 years, assuming an interest rate of 4.5% compounded
semiannually?
6. To rent office space, a company signs a lease agreeing to pay $3,400 at the beginning of each month for the next three years.
What is the cost today of the lease, assuming an interest rate of 5% compounded monthly?
1. Future Value
2. Present Value
3. Future Value
4. Present Value
5. Future Value
6. Present Value
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