Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You have your choice of two investment accounts. Investment A is a 13-year
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- You would like to have $59,000 in 5 years for the down payment on a new house following graduation by making deposits at the end of every three months in an annuity that pays 4.25% compounded quarterly. (a) How much should you deposit at the end of every three months? (b) How much of the $59,000 comes from deposits? (c) How much of the $59,000 comes from interest? (Round UP to the nearest dollar. For example, $247) () afarrow_forwardYour insurance company offered you an annuity that pays you $100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 8%;a. What should be the present value of this annuity?b. If you are given the first payment immediately starting today, what should be the worth of this annuity?arrow_forwardYou have been offered a 7-year annunity of $2,000 beginning four years from now. If the discount rate is 8%, what is the value of the annuity todayarrow_forward
- You are offered an annuity that will pay $10,000 a year for ten years (that is, ten payments), but the payments start after five years have elapsed. If you want to earn 8 percent on your funds, what is the maximum you should pay for this annuity? Show formula and all workingarrow_forwardYou lend a friend $35, 000, which your friend will repay in 12 equal annual end - of - year payments of $7, 000, with the first payment to be received 1 year from now. What rate of return does your loan receive? The rate of return your loan will receive is %arrow_forwardYou will deposit $354 each year into an investment account that earns 5% interest (as an effective annual rate, EAR). Your first deposit will be exactly one year from today, and you'll make a total of 10 deposits. How much will be in your account 10 years from today?arrow_forward
- 1.1) For $20,000, you can purchase a five-year annuity that will pay $5000 per year for five years. The payments occur at the end of each year. a) Calculate the effective annual interest rate implied by this arrangement. 1.2) If you invest $1000 at 11% APR for five years, how much would you have at the end of 5 years? a) Calculate using simple interest. b) Calculate using compound interest.arrow_forwardLidia deposits $800 at the END of each year for 8 years in a savings account. The account pays 12% interest, compounded annually. Lidia calculates that the future value of the ordinary annuity is $9839.75. What would be the future value if deposits are made at the BEGINNING of each period rather than the END? the options are: a. 8071.21 b. 9839.75 c. 11020.53 d. 11820.53arrow_forwardDetermine the size of your investment account 23 years from now (when you plan to retire) if you deposit $15,000 each year, beginning 1 year from now, and the account earns interest at a rate of 9% per year. The size of the investment account is $arrow_forward
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