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You plan to deposit $900 PER YEAR into an account earning 5.25% interest compounded annually. How much money will be in the account after 6 years, assuming the deposits are made at the BEGINNING of each year?

You plan to deposit $900 PER YEAR into an account earning 5.25% interest compounded annually. How much money will be in the account after 6 years, assuming the deposits are made at the BEGINNING of each year?

Essentials Of Investments
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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Please indicate what you entered into your calculator to solve these problems. 1. You graduated with $28,000 in school loans. You will make annual payments of $4,000 at the beginning of each year for the next 10 years. What annual rate of interest are you being charged on your school loans? 2. You bought equipment for $23,000 and agreed to make monthly payments at the end of each quarter for 5 years. Assuming you are being charged 9% interest compounded QUARTERLY, how much will your QUARTERLY payments be? 3. You currently have $750,000 in your building fund. If you start depositing an additional $20,000 per year into this account at the beginning of each year, how much will be in the account after 6 years assuming 5.5% interest compounded annually? 4. You want to start saving for a new car and have decided to put S$90 per month at the beginning of each month into an account which earns 6% compounded monthly. You would like to be able to buy a car for $25,000. (a) How many deposits will you have to make to reach your $25,000 goal? (b) How many years will that be? 5. Mr. Smith wants to be able to withdraw $80,000 per year at the end of each year from his retirement account for 30 years after he retires. Assuming a 7% annual compound interest rate, what is the minimum amount Mr. Smith must have in this account when he retires?
Transcribed Image Text:Please indicate what you entered into your calculator to solve these problems. 1. You graduated with $28,000 in school loans. You will make annual payments of $4,000 at the beginning of each year for the next 10 years. What annual rate of interest are you being charged on your school loans? 2. You bought equipment for $23,000 and agreed to make monthly payments at the end of each quarter for 5 years. Assuming you are being charged 9% interest compounded QUARTERLY, how much will your QUARTERLY payments be? 3. You currently have $750,000 in your building fund. If you start depositing an additional $20,000 per year into this account at the beginning of each year, how much will be in the account after 6 years assuming 5.5% interest compounded annually? 4. You want to start saving for a new car and have decided to put S$90 per month at the beginning of each month into an account which earns 6% compounded monthly. You would like to be able to buy a car for $25,000. (a) How many deposits will you have to make to reach your $25,000 goal? (b) How many years will that be? 5. Mr. Smith wants to be able to withdraw $80,000 per year at the end of each year from his retirement account for 30 years after he retires. Assuming a 7% annual compound interest rate, what is the minimum amount Mr. Smith must have in this account when he retires?
Please indicate what you entered into your calculator to solve these problems. 1. You opened an account with $20,000. You want to have $28,000 at the end of 9 years. At what interest rate must you invest your money in order to reach your goal? 2. You plan to create an account with an opening balance of $5,000. This account earns 8% interest compounded semiannually, how much money will you have in this account at the end of 7 years? 3. You want to buy a new piece of equipment in three years. You estimate the machine will cost $85,000. You can invest money into an account earning 6% compounded MONTHLY. How much will you need to put into the account today in order to be able to buy the new piece of equipment? 4. You currently have $17,155 in an account but you need $40,000. If your account earns 8% interest compounded annually, how many years will it take to reach your goal? 5. You plan to deposit $900 PER YEAR into an account earning 5.25% interest compounded annually. How much money will be in the account after 6 years, assuming the deposits are made at the BEGINNING of each year?
Transcribed Image Text:Please indicate what you entered into your calculator to solve these problems. 1. You opened an account with $20,000. You want to have $28,000 at the end of 9 years. At what interest rate must you invest your money in order to reach your goal? 2. You plan to create an account with an opening balance of $5,000. This account earns 8% interest compounded semiannually, how much money will you have in this account at the end of 7 years? 3. You want to buy a new piece of equipment in three years. You estimate the machine will cost $85,000. You can invest money into an account earning 6% compounded MONTHLY. How much will you need to put into the account today in order to be able to buy the new piece of equipment? 4. You currently have $17,155 in an account but you need $40,000. If your account earns 8% interest compounded annually, how many years will it take to reach your goal? 5. You plan to deposit $900 PER YEAR into an account earning 5.25% interest compounded annually. How much money will be in the account after 6 years, assuming the deposits are made at the BEGINNING of each year?
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