Ann Parsons deposits $10,000 in a savings account each year earning 6% interest annually (EOY). (i) How
Question:
Ann Parsons deposits $10,000 in a savings account each year earning 6% interest annually (EOY).
(i) How much will be in the account at the end of the 15th year?
(ii) How much would you have if Ann could start saving the $10,000 per year, immediately
b) Erin, the A/R Manager is trying to decide if she should accept a legally binding promissory note from a customer (Owen) in the amount of $5,000 to be paid in 5 years in exchange for his $1,000 account.
He can't currently pay the account as he is short of funds but he is going back to college and feels that in five years, he can settle the amount. Interest rates are currently about 8%.
What should Erin decide and why?
c) Andrew wants to retire upon the accumulation of $1,000,000. How many years must he work if he is able to save and invest per year $27,185 at 6% interest compounded annually?
d) Chase just inherited $200,000 and he can deposit in an account at the local bank that will earn him 5% interest. How much will he have if he deposits the amount for
(i) 10 years
(ii) 20 years
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty