ou are offered an annuity that will pay R17,000 per year for 7 years (the first payment will be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today? 15. If you deposit R15,000 per year for 9 years (each deposit is made at the beginning of each year) in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years? 16. You pl

ou are offered an annuity that will pay R17,000 per year for 7 years (the first payment will be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today? 15. If you deposit R15,000 per year for 9 years (each deposit is made at the beginning of each year) in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years? 16. You pl

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
You want to accumulate $1 million by your retirement date, which is 25 years from now. You will make 25 deposits in your bank, with the first occurring today. The bank pays 8% interest, compounded annually. You expect to receive annual raises of 3%, which will offset inflation, and you will let the amount you deposit each year also grow by 3% (i.e., your second deposit will be 3% greater than your first, the third will be 3% greater than the second, etc.). How much must your first deposit be if you are to meet your goal?
You are offered an annuity that will pay $4,250 per quarter for 8 years (first payment made today). If you feel that the appropriate discount rate is 12%, what is the annuity worth to you today?
4. You are offered an annuity that will pay R17,000 per year for 7 years (the first payment will be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today? 15. If you deposit R15,000 per year for 9 years (each deposit is made at the beginning of each year) in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years?
You are offered an annuity that will pay $11,000 per year for 24 years (the first payment will occur one year from today). If you feel that the appropriate discount rate is 12%, what is the annuity worth to you today? $914,490.09 $1.299,707.65 $95,902.77 $1,455,672.57 $85.627.47 You are told that if you invest $10,900 per year for 12 years (all payments made at the end of each year) you will have accumulated $670,000 at the end of the period. What annual rate of return is the investment offering? 29.99% 23.63% 20.63% 26.99% 33.44%
Assume you are to receive a 5-year annuity with annual payments of £1,000. The first payment will be received at the end of Year 1, and the last payment will be received at the end of Year 5. You will invest each payment in an account that pays 9% compounded annually. Although the annuity payments stop at the end of year 5, you will not withdraw any money from the account until 10 years from today, and the account will continue to earn 9% for the entire 10-year period. What will be the value in your account at the end of Year 10 (rounded to the nearest pound)?a. £9,208b. £10,037c. £16,560d. None of the above
You want to have GH¢ 50,000 in your savings account five years from now, and you’re prepared to make equal annual deposits into the account at the end of each year. If the account pays 9.5 percent interest, what amount must you deposit each year?
● An investment will provide you with $100 at the end of each year for the next 10 years. What is the present value of that annuity if the discount rate is 8% annually? • What is the present value of the above if the payments are received at the beginning of each year? • If you deposit those payments into an account earning 8%, what will the future value be in 10 years? • What will the future value be if you open the account with $1,000 today, and then make the $100 deposits at the end of each year?
22. You are offered an annuity that will pay P17,000 per year for 7 years (the first payment will be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today?
To supplement your planned retirement, you estimate that you need to accumulate R 220, 000 in 42 years. You plan to make equal annual end of year deposits into an account paying 8% annual interest. a. How large must the annual deposit be to create the R 220,000 fund in 42 years? b. If you can afford to deposit only R600 per year into the account, how much will you have accumulated by the end of the forty-second year?
An annuity offers to pay £8,700 per year for 20 years, and the nominal annual bank interest rate is 5%, compounded annually (this is not expected to change). A financial advisor offers to sell you this annuity for £100,000. Is this good value?