You receive a $10,000 check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning 10% peryear and you think you will need to have $20,000 saved for the down payment. How long will it be before the $10,000 has grown to $20,000?To double the money you received from your grandparents, it will takeyears. (Round to two decimal places.)

The concept of time value of money will be applied here. As per the concept of time value of money…

Answered: You receive a $10,000 check from your…

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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You receive a $5,000 check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning 8% per year and you think you will need to have $10,000 saved for the down payment. How long will it be before the $5,000 has grown to $10,000 ? To double the money you received from your grandparents, it will take years. (Round to one decimal place.)
You graduate and receive a $10,000 cheque from your grandparents. You decide to save it toward a down payment on a house. You invest it earning 10% per year, and you think you will need to have $20,000 saved for the down payment. How long will it be before the $10,000 has grown to $20,000? To double the money you received from your grandparents, it will take years. (Round to one decimal place.) Etext pages Ask my instructor Clear all
You graduate and receive a $7,000 cheque from your grandparents. You decide to save it toward a down payment on a house. You invest it earning 8% per year, and you think you will need to have $14,000 saved for the down payment. How long will it be before the $7,000 has grown to $14,000? To double the money you received from your grandparents, it will take years. (Round to one decimal place.)
You receive a $3,000 check from your grandparents for graduation. You decide to save it toward a down payment on a house. You invest it earning 8% per year an you think you will need to have $6,000 saved for the down payment. How long will it be before the $3,000 has grown to $6,000 ?
You are planning for your child's future and would like to set up a savings account for their college tuition. You suspect that you don't want to make a lump sum, so you decide to make equal monthly deposits. After calculating, you plan to have $100,000 in the account in 18 years. You found an account that gives 2% APR compounded monthly. Find the amount of your monthly deposits needed to obtain your projected future value.
A relative has promised to pay you $93.00 today, and he will pay you additional payments every year for the next five years. Each year he will add $73.00 to the previous payment. (So, the payment in year 1 will equal $166.00). You decide to save every dollar you are given and will invest the money in an account paying 4.00% annual interest. How much money will you have accumulated in five years? Keep in mind that you will have six total cash flows to invest. Submit Answer format: Currency: Round to: 2 decimal places.
Suppose that you are saving for college for a child. That child was just born and you will have to make 4 equal tuition payments over a four year period with the first occurring in exactly 18 years. Each successive tuition payment is made exactly a year after the prior payment. You also plan on buying this child a car in exactly 15 years using this same savings. You will pay $30,000 at that time for the car. You will be depositing money every year with the first check deposited into savings today and the last one the day the first tuition check is due. If you want to be able to pay $65,000 each year for tuition, how much do you have to save per year? Assume the discount rate is 10 percent per year.
You are saving for retirement. To live comfortably, you decide you will need to save $4,000,000 by the time you are 65. Today is your 29th birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into a savings account. If the interest rate is 5%, how much must you set aside each year to make sure that you will have $4,000,000 in the account on your 65th birthday?
You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million dollars. Your plan is to deposit $61,000 at the end of each year for the next 6 years. You expect to earn 11 percent each year. Required: 1. Determine how much you will have saved after 6 years. 2. Determine the amount saved if you were able to deposit $64,000 each year. 3. Determine the amount saved if you deposit $61,000 each year, but with 13 percent interest.
Today is your 23rd birthday. Your aunt just gave you $1,000. You have used the money to open up a brokerage account. Your plan is to contribute an additional $2,000 to the account each year on your birthday, up through and including your 65th birthday, starting next year. The account has an annual expected return of 12 percent. How much do you expect to have in the account right after you make the final $2,000 contribution on your 65th birthday?
You are saving for retirement. To live comfortably, you decide you will need to save $3,000,000 by the time you are 65. Today is your 29th birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into a savings account. If the interest rate is 10%, how much must you set aside each year to make sure that you will have $3,000,000 in the account on your 65th birthday?
You are hoping to buy a house in the future and recently received an inheritance of $16, 000. You intend to use your inheritance as a down payment on your house. a. If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will it be before your inheritance grows to $33, 000? b. If you let your money grow for 9.5 years at 8 percent, how much will you have? c. How long will it take your money to grow to $33, 000 if you move it into an account that pays 3 percent compounded annually? How long will it take your money to grow to $33, 000 if you move it into an account that pays 12 percent? d. What does all this tell you about the relationship among interest rates, time, and future sums?

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