An annuity makes ten annual payments of $1000 each starting 3 years from now. What is...
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An annuity makes ten annual payments of $1000 each starting 3 years from now. What is the present value today if the discount rate is 10% compounded annually? Question 3) You get weekly checks of $50 from a part-time job (starting one week from now). If the interest rate is 12% compounded daily: a) What is the present value of one year's salary (52 checks)? b) If you deposit each check in the bank, how much will you have after one year? c) If you deposit each check in the bank but quit your job after one year (and leave all the accumulated money in the bank), how much will you have in the bank at the end of year 2? Question 4) You currently owe a finance company $1500 that you would like to pay back over the next 12 months (payments will be made at the end of the month.) The finance company is charging you 18% interest compounded quarterly. How much will your monthly payments be? Question 5) Your friend is celebrating her 30th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $90,000 from her savings account on each birthday for 12 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 5.8695% percent interest with quarterly compounding. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund. a) If she starts making these deposits on her 31st birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement? b) Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump-sum payment on her 30th birthday to cover her retirement needs. What amount does she have to deposit? c) Suppose your friend's employer will contribute $800 to the account every year as part of the company's profit-sharing plan. In addition, your friend expects a $36,000 distribution from a family trust fund on her 53rd birthday, which she will also put into the retirement account. What amount must she deposit annually now to be able to make the desired withdrawals at retirement? An annuity makes ten annual payments of $1000 each starting 3 years from now. What is the present value today if the discount rate is 10% compounded annually? Question 3) You get weekly checks of $50 from a part-time job (starting one week from now). If the interest rate is 12% compounded daily: a) What is the present value of one year's salary (52 checks)? b) If you deposit each check in the bank, how much will you have after one year? c) If you deposit each check in the bank but quit your job after one year (and leave all the accumulated money in the bank), how much will you have in the bank at the end of year 2? Question 4) You currently owe a finance company $1500 that you would like to pay back over the next 12 months (payments will be made at the end of the month.) The finance company is charging you 18% interest compounded quarterly. How much will your monthly payments be? Question 5) Your friend is celebrating her 30th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $90,000 from her savings account on each birthday for 12 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 5.8695% percent interest with quarterly compounding. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund. a) If she starts making these deposits on her 31st birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement? b) Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump-sum payment on her 30th birthday to cover her retirement needs. What amount does she have to deposit? c) Suppose your friend's employer will contribute $800 to the account every year as part of the company's profit-sharing plan. In addition, your friend expects a $36,000 distribution from a family trust fund on her 53rd birthday, which she will also put into the retirement account. What amount must she deposit annually now to be able to make the desired withdrawals at retirement?
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Question 3 a To find the present value of one years salary 52 checks at a weekly amount of 50 and an interest rate of 12 compounded daily we can use the formula for the present value of an annuity PV ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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