Suppose that $ 1,500 is placed into a bank account at the end of each month over the next 8 years. What is the future worth at the end of 8 years when the interest rate is 9% compounded at the given intervals? a) Quarterly, b) Monthly, c) Continuously

Suppose that $ 1,500 is placed into a bank account at the end of each month over the next 8 years. What is the future worth at the end of 8 years when the interest rate is 9% compounded at the given intervals? a) Quarterly, b) Monthly, c) Continuously

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

See similar textbooks

Related questions

Q: Suppose you deposit $469 per week in a bank account for 5 years. The interest rate(APR) is 7.2%,…

A: present value of annuity = P * {1-[1/(1+r)^n]/r} Where, r = rate of interest per period i.e. 7.2%/52…

Q: A company has a $160,000 note due in 7 years. How much should be deposited at the end of each…

A: Sinking fund: It is an account that uses compound interest and into which periodic deposits are…

Q: What is the accumulated value of periodic deposits of $60 at the beginning of every month for 17…

A: Monthly deposit (P) = $60 Period = 17 Years Number of monthly deposits (n) = 17*12= 204 Interest…

Q: Suppose your bank pays 10% interest, compounded semiannually. Find out how much should be deposited…

A: Present value is the amount a person is willing to pay now, in order to get an amount for a…

Q: If you deposited $18000 and the bank is paying 7% interest compounded monthly, how much would be…

A: We know that the formula to calculate the accumulated value of cash flow is C*(1+r)n, where C is the…

Q: A sum of money is deposited now in a savings account. The effective annual interest rate is 12% and…

A: Individuals deposit a sum of money into savings accounts in order to earn interest and accumulate a…

Q: What is the future worth of a series of equal year-end deposits of $3,000 for 15 years in a savings…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: What is the accumulated value of deposits of $1020.00 made at the end of every six months for three…

A: Accumulated deposits include the amount deposited and compounding interest accumulated over the…

Q: If the bank is paying 8% interest compounded quarterly, how much must you deposit today in your…

A: The formula to calculate the present value of future cash inflow is C/(1+r)n, where C is the cash…

Q: If you deposit $500 in a bank account today that earns 3% interest and you deposit $20 per month…

A: Option 1: Deposit $ 500 now Future Value = Present Value*(1+ Interest rate)n Solved using Financial…

Q: Commercial bank pays 12% interest and compounds quarterly. If 1000 are initially, how much shall it…

A: Computation:

Q: Assuming that four annual deposits of ($1000) are occurred but the first payment deposit at end of…

A: The annual payments are going to occur will be equivalent to the future value of annual payment that…

Q: A bank is offering 10% compounded quarterly. If you put $200 in an account, how much will you have…

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

Q: Suppose you deposit $1,250 at the end of each quarter in an account that will earn interest at an…

A: Computations as follows: Hence, the amount available at the end of four year is $24,225.28.

Q: If you deposited $35000 and the bank is paying 4% interest compounded every 4 months, how much would…

A: Future value can be referred to as the value of an underlying asset or security at a future date.…

Q: Suppose that $1,000 is invested for 4 years at an interest rate of 12%, compounded quarterly. How…

A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…

Q: An investment promises to pay into an account that pays you 6 percent annually, $151 per month for…

A: In this we have to calculate future value FACTOR and get future value.

Q: What is the interest earned in a savings account after 12 months on a balance of $1000 if the…

A: Because a dollar on hand now is worth more than a dollar promised in the future, the time value of…

Q: What is the accumulated value of periodic deposits of $50 at the beginning of every month for 19…

A: Accumulated value is future value of monthly payments

Q: What lump sum of money must be deposited into a bank account at present time so that $1,500 per…

A: Semi annual withdrawal = $ 1500 Period = 10 Years Number of withdrawals = 10*2 = 20 First withdrawal…

Q: $480 is deposited at the beginning of every 6 months into a savings account. This will continue for…

A: An account where deposit made by accountholder is credited and credit balance is added with interest…

Q: Suppose that you deposit $10 at the end of each day into a savings account that pays 2% interest…

A: Accumulated value can be defined as the sum of investment and interest earned on investment over a…

Q: If you invest $900 in a bank in which it will earn 8 percent compounded quarterly, how much will it…

A: PV = $ 900; r = 8% compounded quarterly; m = frequency of compounding = 4 (as there are four…

Q: Suppose 500$ is initially placed in savings account and 500$ is deposited at the end of every month…

A: Future Value of Cash Flow = Amount Invested * ( 1+r)n Where r is Rate of Interest and n is period…

Q: What lump sum of money must be deposited into a bank account at the present time so that $500 per…

A: The regular or lump-sum amount that is received or paid after a specific time period rather than…

Q: Suppose an investor plans to make monthly deposits into an account that pays 9% interest, compounded…

A: We will first calculate the amount needed to pay on a monthly basis so we will take the period as…

Q: What is the accumulated value of periodic deposits of $40 at the beginning of every month for 17…

A: This is the case of an annuity due. An annuity due is that annuity where the cash flows occur at the…

Q: If you invest $2,538.00 in an account earning an annual interest rate of 3.153% compounded…

A: Interest is the fee paid to investor for investing funds over a period of time. It is the…

Q: Suppose that a savings account attracts an interest rate of 1.6% per annum. How much would need to…

A: Present value means the current value of future money or cash flow given a specified rate of return.…

Q: Suppose that $1,500 is placed in a bank account at the end of each quarter over the next 20 years.…

A: Use the following formula to calculate the effective interest rate (EIR). Where i is the effective…

Q: Suppose you deposit $125 on the first of every month for 240 months, and the bank credits interest…

A: The term annuity depicts a stream of equivalent periodic cash flows over a specific time duration.…

Q: What is the value today of $500 received at the beginning of each period of six months for 12 years…

A: The following formula will be used to calculate today value as follow:

Q: For 8 years, $52 is deposited each week into an account that earns 2.1% interest, compounded weekly…

A: This question has two parts, First - $300 compounding every week for 8 years which is simple…

Q: .A series of equal cash $200 that is deposited at the end of each month will last for 10 years. How…

A: Monthly deposit (M) = $200 n = 10 years = 120 payments r = 9% per annum = 0.75% per month

Q: Suppose that you deposit $750 into a bank account today. If the bank pays 8 percent APR per year,…

Q: If $550 is deposited at the end of each quarter into an account paying 8% compounded quarterly, how…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: If $1,500 is deposited in a savings account at the beginning of each year for 20 years (a total…

A: The formula to compute future equivalent worth of present value:

Q: In order to have $373,010 in 29 years, how much needs to be deposited each month into a bank account…

A: Information Provided: Future value = $373,010 Years = 29 Interest rate = 1.1% compounded monthly…

Q: If an investment of $5,000 is made in an account returning 2% ,then how long will it take for the…

A: Future value is the value of the current assets or some amount that is invested today and amount…

Q: Suppose that $6,000 is placed in a bank account at the end of each quarter over the next 10 years.…

A: Quarterly payment (Q) = $6000 n = 10 years = 40 quarters Interest rate = 13%

Q: How much will be in the account at the end of 4 years?

A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…

Q: Suppose that $500 is deposited at the end of every quarter for 6 years in an account that pays 8%…

A: To calculate the value of the annuity, we can either use excel or fv calculator where R= RATE OF…

Q: How much money must be deposited in a savings account each quarter in order to accumulate $10,000 at…

A: The Future Value of the annuity is the total value of all the payments which is occurred regularly…

Q: What is the accumulated value of periodic deposits of $60 at the beginning of every month for 22…

A: Monthly deposit (P) = $60 Interest rate = 2.59% Monthly interest rate (r) = 2.59%/12 =…

Q: Suppose a bank pays you 4% interest compounded quarterly. You deposited $10,000. How much will you…

A: If interest is computed on the actual loan amount, then it is simple interest. When the interest is…

Question

Suppose that $ 1,500 is placed into a bank
account at the end of each month over the
next 8 years. What is the future worth at the
end of 8 years when the interest rate is 9%
compounded at the given intervals?
a) Quarterly, b) Monthly, c) Continuously

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Money Management and Achieving Financial Goals

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Suppose that $1,500 is placed in a bank account at the end of each quarter over the next 20 years. What is the account's future worth at the end of 20 years when the interest rate is 8% compounded(a) semiannually?(b) monthly?(c) continuously?
Suppose that $500 is deposited at the end of every quarter for 6 years in an account that pays 8% compounded quarterly. What is the interest rate per period? Find the future value of the annuity.
Suppose that your bank pays 6% interest, compounded quarterly. Use Table 12-2 to find how much should be deposited now to yield an annuity payment of $1,500 at the end of each three months, for 3 years. (Round your answer to the nearest cent.) $
Suppose that a person deposits $500 in a savings account at the end of each year, starting now, for the next 12 years. If the bank pays 8% per year, compounded annually, how much money will accumulate by the end of the 12-year period? Repeat Problem for an interest rate of 6.25% per year, compounded annually?
Suppose 500$ is initially placed in savings account and 500$ is deposited at the end of every month for the next year. If interest is at 6% compounded monthly, how much is in the account at the end of the year?
Suppose an annuity pays $2000 at the end of each 3 month period for 3.5 years at an interest rate of 4%, compounded quarterly a. find the total number of periods b. find the real interest rate per period c. find the present value (give the formula)
Regular equal amounts of R1200 are deposited into a savings account every three months for six years. If the amount in the savings account nine months after the last deposit is equal to R42 000 then, using Newton's method, the effective quarterly interest rate can be calculated from the iterative equation:
If you deposit $100 in a savings account at the end of each month for 2 years, the balance will be a function f (r) of the interest rate, r%. At 7% interest (compounded monthly), f (7) = 2568.10 and f (7) = 25.06. Approximately how much additional money would you earn if the bank paid 7 1/2 % interest?
Suppose you deposit $125 on the first of every month for 240 months, and the bank credits interest at the end of every month at the annual rate of 6%. How much money do you have in your account at the end of 20 years?
What lump sum of money must be deposited into a bank account at present time so that $1,500 per semi-annual can be withdrawn for 10 years, with the first withdrawal scheduled for five years from today? The nominal interest rate is 12% per year compounded quarterly