Suppose Stephanie deposited the $50,000 in a fixed deposit. For the shortfall, she thought of purchasing a 5-year ordinary annuity that pays an interest rate of 3.5% per annum, what annual deposit will be required to cover the shortfall?

Q: You took out a loan to buy a new car. The monthly interest rate on the loan is 0.6%. You have to pay…

A: Future value refers to the compounding the future cash flows with the interest rate compounding for…

Q: given the situation , choose the correct formula to solve the problem: find the future value of an…

A: Future value of annuity = P * [ (1+r)^n  - 1 ] /r  Where P = Annuity amount i.e. $5000 r = rate of…

Q: Suppose you borrow $21,000 from your bank to buy a car.  You agree to pay $433.89 per month for 60…

A: As per the time value of money, a dollar is worth more today than the same dollar in the future.…

Q: What is the present value of an annuity that pays $58 per year for 13 years and an additional $1,000…

A: We can make use of the financial calculator to obtain the present value, PV. Inputs: I/Y = rate =…

Q: per year and the cash value is expected to be $1.5 million at retirement. Approximately how many…

A: The given problem can be solved using NPER function in excel. NPER function computes no. of years/…

Q: ou are offered an annuity that will pay R17,000 per year for 7 years (the first payment will be made…

A: Given: Annuity amount = R17,000 Year = 7 Discount rate = 11%

Q: Explain the nature of the potential lending losses associated with each of the following: default…

A:

Q: I want 800000 for retirement in 25 years. How much would she need to deposit into the account each…

A: Future value (FV) = 800,000 Period = 25 Years Number of monthly deposits (n) = 25*12 = 300 Interest…

Q: 5. My pension plan is an annuity with a guaranteed return of 5% per year. (Assume compounding at…

A: a. Let’s determine the future value of payments required The Amount required in the account during…

Q: Calculate the present value of an annuity with monthly deposits of $2,000 at 5% for 20 years.…

A: Monthly deposits (M) = $2000 Interest rate (r) = 5% per annum = 0.4167% per month n = 20 years = 240…

Q: Your grandma is thinking of putting some of her retirement savings into a Term Deposit for one year,…

A: Given:

Q: Ebony wants to invest $1000 in savings certificates that bear an interest rate of 7.5% compounded…

A: We can determine the time taken for the amount to be a certain value by rearranging the formula…

Q: An investor may deposit $2,000 into both a traditional IRA and a Roth IRA. After 30 years, given a…

A: Investment means engaging the funds to generate income for the coming time. Compounding is a way to…

Q: Ms. Perez wants to invest in a savings account with interest rate of 9% per year. She decided to…

A: Present value of annuity is the current value of the future payments that are calculated using the…

Q: younger brother's savings account, with the first deposit being made on your brother's fifth…

A: The present value is the amount without interest and future value is the amount with accumulated…

Q: Assuming that your Mother wishes to make annual deposits into your younger brother's savings…

A: Present Value of the gradient “G” 400 for 4 years and present Value of “A” $2000 for 4 years is the…

Q: An annuity offers to pay £8,700 per year for 20 years, and the nominal annual bank interest rate is…

A: Present Value of annuity refers to the present value of all the future payments of and series of…

Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Yearly annual income = $15,000 Interest rate = 4%   NOTE: As per our…

Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Annual income = $15,000 Interest rate = 4%   NOTE: As per our policy, we…

Q: Use the savings plan formula to answer the following question.   You put ​$300 per month in an…

A: Monthly investment = $300Interest rate = 2.5%Period = 17 years

Q: John wants to borrow 75,800 from a bank payable in 3 years and 9 months. if the bank charges 9.5%…

A: Note:  It is assumed that the loan is given on a simple interest rate basis. Simple Interest refers…

Q: Pedro, who deposited P500,000.00 today with a financial Institution M, agreed with the latter that…

A: Initial deposit (I) = P500,000.00 Annual interest rate = 0.08 Monthly period (n) = 14 months Value…

Q: An investor desires to deposit with a trust company a sum just sufficient to provide his family with…

A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…

Q: A company needs to buy an annuity package that will provide a future income to an individual over a…

A: Annuity amount, A1 = £4,421 Period, n1 = 13 years Interest rate per period, r1 = 4.0% The present…

Q: Compute the annual interest, total interest and the amount to be received or paid at the end of the…

A: Simple interest is computed by multiplying principal with rate of interest and no. of years. SI = A…

Q: You took out a loan to buy a new car. The monthly interest rate on the loanis 2.5% . You haveto pay…

A: Here's a detailed calculation for better understanding. Present Value of an Annuity DueThe present…

Q: epay a loan over five years with the following stream of cash payments: $1,000; $1,100; $1,250;…

A: Annuity is one uniform constant payments to be received or to be paid over the period of payments,

Q: Someone needs to buy an annuity package that will provide a future income to an individual over a…

A: Annuity refers to a stream of constant periodic cash flows. Here the cash flows are occurring at the…

Q: A man intends to buy a machine via loan. He does so by depositing a down payment followed by…

A: In this we need to find present value of both and from that we can get initial deposit.

Q: f you borrows $60,000 from the bank at 10% interest over the 7 years of the loan. • What equal…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: You manage an investment fund that sells annuities. You sell a 6-year ordinary level annuity that…

A: Monthly payment = $2115 Interest rate = 3.46% APR compounded monthly So, monthly interest rate =…

Q: company needs to buy an annuity package that will provide a future income to an individual over a…

A: Annuity is the uniform payments over a period of time and annuity dues are paid at the beginning of…

Q: You took out a loan to buy a new car. The monthly interest rate on the loan is 0.6%. You have to pay…

A: Present worth or ordinary annuity can be found by using the PV formula function in the excel sheet.…

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.