An annuity makes ten annual payments of $1000 each starting 3 years from now. What is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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?
Expert Answer:
Answer rating: 100% (QA)
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:
Students also viewed these accounting questions
-
What is the present value of five $800 cash flows that occur at the end of each year for the next five years at a periodic interest rate of 8% compounded annually? The first cash flow occurs a year...
-
What is the present value of twenty $500 cash flows that occur at the end of each year for the next twenty years at a periodic interest rate of 7.5% compounded annually? The first cash flow occurs a...
-
What is the present value of $ 5,000 per year, at a discount rate of 6 percent, if the first payment is received 6 years from now and the last payment is received 25 years from now?
-
(a) Decide whether each of the following expressions are true or not. Answer yes or no. In any case where it is not true, provide the actual O-complexity. (i) log n = O(n!) (ii) 10! = O(log n) (iii)...
-
How do large corporations adjust their liquidity in the money markets?
-
How does the modified accrual basis of accounting differ from accrual accounting? Why is modified accrual used for governmental fund financial statements?
-
A four cylinder, four stroke cycle petrol engine develops \(40 \mathrm{~kW}\) at \(2500 \mathrm{rpm}\). The mean effective pressure is \(0.8 \mathrm{MPa}\) and mechanical efficiency is \(80 \%\)....
-
Which of the following bonds offers the highest current yield? a. A 91/2%, 20-year bond quoted at 973/4 b. A 16%, 15-year bond quoted at 1645/8 c. A 51/4%, 18-year bond quoted at 54
-
2- You own a shoe store and are deciding which shoes to stock for the upcoming season. You can either stock designer shoes, midrange shoes, or inexpensive shoes. If you stock designer shoes, you can...
-
After the success of the companys first two months, Santana Rey continues to operate Business Solutions. (Transactions for the first two months are described in the Chapter 2 serial problem.) The...
-
Leah owns a financial services business called Leah Hunter & Associates and lodges a quarterly Business Activity Statement (BAS). For the September quarter Activity Statement, the business paid a...
-
Write a program that uses two identical arrays of just eight integers. It should display the contents of the first array, then call a function to sort the array using an ascending order bubble sort...
-
According to the documentary Drugs, Inc: Cocaine: What country consumes/sells most of the 42 tons of cocaine in the UK?
-
Harry and Meghans (H&Ms) is Canadas largest producer and exporter of maple syrup. Their operations are expanded, so they need to invest in more bottling equipment. Three different models are...
-
Bond Price: $2000 Yearly Coupon Payment: 8% Years to Maturity: 10 Years Bond is sold at the end of 3rd year. Inflation in 3rd Year: 2% Forecasted required return: 4% What is the real return of the...
-
3. The ABX Company is interested in conducting a study to identify factors that affect absenteeism among its production employees. After reviewing the literatures on absenteeism and interviewing...
-
The S&P Small Cap index futures contract is traded on the Chicago Mercantile Exchange. The contract multiplier is equal to $100. If the index futures level is 1,243.05. What is the size of 1 futures...
-
What are the main distinctions between the different schools of legal interpretation?
-
The following are the inventories for the years 2007, 2008, and 2009 for the Parry Company: Required Prepare journal entries to record the lower of cost or market for each of the following...
-
What are the necessary conditions for the retail inventory method to provide valid results?
-
Clean-All, Inc., sells washing machines with a three-year warranty. In the past Clean-All has found that in the year after sale, warranty costs have been 3% of sales; in the second year after sale,...
-
Show all the steps leading to the integral balance equation (18.6) in the text. Use the following boundary conditions and verify Eq. (18.7). (i) At \(y=0, T=T_{\mathrm{S}}\). (ii) At...
-
Consider the flat-plate heat transfer to be solved by the similarity approach. Show all the details leading to Eq. (18.15). What are the boundary conditions on \(\theta\) ? Extend your MATLAB code to...
-
For fluids with \(\operatorname{Pr} <1\) the velocity profile is assumed to be a cubic for \(y
Study smarter with the SolutionInn App