Personal Finance Problem Time value You have $1,500 to invest today at 7% interest compounded annually. . Find how much you will have accumulated in the account at the end of (1) 3 years, (2) 6 years, and (3) 9 years. ■. Use your findings in part a to calculate the amount of Interest earned in (1) the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9), Compare and contrast your findings in part b. Explain why the amount of interest earned increases in each succeeding 3-year period.

Personal Finance Problem Time value You have $1,500 to invest today at 7% interest compounded annually. . Find how much you will have accumulated in the account at the end of (1) 3 years, (2) 6 years, and (3) 9 years. ■. Use your findings in part a to calculate the amount of Interest earned in (1) the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9), Compare and contrast your findings in part b. Explain why the amount of interest earned increases in each succeeding 3-year period.

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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QUESTION 1 Considering the following scenario. In years 0, 2, 4, 6, and 8, you deposit $750 in your savings account. The saving account earns 4.25% compounded anbually. What is the future value in year 10? 4,847.22 5,411.56 3,579.94 6,411.56
Question 1 Q1(a) Create simple examples to illustrate the following concepts. i. Time value of money ii. Effective interest Sinking Fund 111. iv. Amortized loan Q1(b) Assuming you will be able to deposit GHC6000 at the end of each of the next four years in a bank account paying 9% interest. You currently have GHC6000 in the account. How much will you have in four years? Q1(c) After carefully going over your budget, you have determined you can afford to pay GHC854 per month toward a new car. You call up your local bank and find out that the going rate is 1% per month for 48 months. How much can you borrow? Q1(d) Suppose, a business takes out a GHC7000, 7-year loan at 9%. If the loan agreement calls for the borrower to pay the interest on the loan balance each year and to reduce the loan balance each year by GHC 1000. How would the loan repayment be? Illustrate with the aid of a table.
Question 4 John makes an Investment of 10900 Into an account that pays Interest compounded annually. In addition, he makes a yearly deposit of $170. At the end of 3 years, his balance is 15900. Determine the Interest he earned on the savings account. John annual percentage rate on his investment was Time Value of Money Solver Enter the given values. N: = 0 Number of Payment Periods 1:%= 0 Annual Interest Rate as a Percent PV: = Present Value 0 PMT: = 0 Payment FV: = in Solve Solve Solve Solve Salve 3 31
Previous Problem Problem List Next Problem Suppose you invest $11,695.00 into an account earning an interest rate of 2.767% compounded continuously for 1 year(s) and thereafter earning an interest rate of 3.227% compounded weekly. How much money is in the account after 11 years? The amount in the account is $ Preview My Answers Submit Answers You have attempted this problem 0 times
QUESTION 3 If you deposit today 11,445.85 in an account earning 8% compound interest, for how long should you invest the money in order to earn 12,488.36 (profit)?
Exercise 4. Simple Interest. Calculate the amount of money you will have in the following account after 5 years, assuming that you earn simple interest You deposit $700 in an account with an annual interest rate of 4% Exercise 5. Compound Interest. Use the compound interest formula to compute the balance in the following accounts after the sd period of time, assuming interest is compounded annually: $10.000 is invested at an APR of 4% for 10 years. Ộ1 = P x (1+ APR %3D
Question 4 You deposit $500 each month into an account earning 7% interest compounded monthly. a) How much will you have in the account in 20 years? b) How much total money will you put into the account? c) How much total interest will you earn?
QUESTION 4 For the next 13 years, you will deposit $2,250 every quarter in a savings account. The account pays 3,75% interest compounded quarterly. What is the future value of this series? a. 93,585.77 O b. 149,891.29 O c. 72796.45 O d. 436,228.07
Question 14 Suppose for an annuity due, you want to have $30,000 in the bank after 20 years. Assuming you make deposits at the beginning of each year at an interest rate of 4%, how much would you have to deposit at the start of each year, assuming that each deposit is the same amount? A) s968.70 B $816.22 $625.00 $737.24
Question content area top Part 1 (Comprehensive problem) You would like to have $57,000 in 14 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 6 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 6 percent on this deposit.) c. At the end of five years, you will receive $15,000 and deposit this in the bank toward your goal of $57,000 at the end of year 14. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 6 percent on your deposits.) Question content area bottom Part 1 a. How much must you deposit annually to accumulate this amount?…
● Question 1 John is 25 years old and wants to have 1 million dollars in savings by the time he retires at 65. He plans to open a savings account that pays 4% Interest compounded quarterly and he will be making quarterly deposits of $250 Into the account. John will need to make an initial deposit of s Time Value of Money Solver Enter the given values. N:= 0 Number of Payment Periods 0 1:% Annual Interest Rate as a Percent PV: Present Value PMT: Payment 0 0 FV: Future Value P/Y: 12 Payments per Year 0 OM Solve Solve Solve Solve Solve to reach his goal of 1 million hp
Question content area top Part 1 (Comprehensive problem) You would like to have $ 60,000 in 14 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 6 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn 6 percent on this deposit.) c. At the end of five years, you will receive $ 10,000 and deposit this in the bank toward your goal of $ 60,000 at the end of year 14. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn 6 percent on your deposits.) Question content area bottom Part 1 a. How much must you deposit annually to…

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