Question

Two payments of $1,800 each are desired in Year 9 and 10. To be able to pay off this payment, four equal amounts will be deposited in a bank in years 3 through n=6 at an interest rate (i) of 13% per year. Determine the value of the equal amount that should be deposited in a bank in Year 3 to Year 6.

Answer #1

SOL .

PMT = 1800

RATE = 13 %

N = 2

PV = 1800 / (1+r)+1800/(1+r)²

= 3002.58

FV = 3002.58

N = 2

RATE = 13%

PV = 3002.58 / (1+r)²

= 2351.46

FV = 2351.46

RATE = 13%

N = 4

FV Annuity Factor

=[ (1+r)n -1 ]/r

=[(1.13)⁴ -1 ] / 0.13

=4.8497

FV = X * FV Annuity Factor

2351.46 = X * 4.8497

2351.46/ 4.8497 = X

484.85 = X

Value of the equal amount that should be deposited in a bank in
Year 3 to Year 6 is **484.85**

*** PLEASE FEEL FREE TO POST ANY QUERY IN THE COMMENT
SECTION AND PLEASE UPVOTE IF YOU FOUND THIS ANSWER HELPFUL
***

What equal amount Q must be deposited at the beginning of each
year for the next 5 years in a savings account 10% interest in
order to accumulate 1000 at the end of year 6. The value of Q
is?
First cost for special equipment = $1000 per every 50 years of
its life cycle. If n= infinity and I = 9% then it’s EUAC is most
nearly:
You obtain 1000 loan from the bank. The amount to repay the...

Q2) An engineer borrowed $3000 from the bank, payable in six
equal end-of-year payments at 8%. The bank agreed to reduce the
interest on the loan if interest rates declined in the United
States before the loan was fully repaid. At the end of 3 years, at
the time of the third payment, the bank agreed to reduce the
interest rate from 8% to 7% on the remaining debt. What was the
amount of the equal annual end-of-year
payments for...

Five years ago you incurred a 10-year term loan that required
annual payments of $1,150 per year. You have made four payments in
previous years and the fifth payment is due today. The note holder
proposes that you buy back this note today for $4,395. Would it pay
you to borrow the money at the bank at 13% interest rate and buy
back this note (hint: calculate the market value of the loan and
compare with the price for which...

An engineer borrowed $3000 from the bank, payablein six equal
end-of-year payments at 8%. The bankagreed to reduce the interest
on the loan if interestrates declined in the United States before
the loanwas fully repaid. At the end of 3 years, at the timeof the
third payment, the bank agreed to reduce theinterest rate from 8%
to 7% on the remaining debt.What was the amount of the equal annual
end-of-year
payments for each of the first 3 years? What was...

A state lottery commission pays the winner of the Million Dollar
lottery 10 installments of $100,000/year. The commission makes the
first payment of $100,000 immediately and the other n = 9
payments at the end of each of the next 9 years. Determine how much
money the commission should have in the bank initially to guarantee
the payments, assuming that the balance on deposit with the bank
earns interest at the rate of 9%/year compounded yearly.
Hint: Find the present...

A 10 year loan is being repaid with payments at the end of each
year in the following manner. The first payment is $5,000 and each
subsequent payments decreases by $400. Find the original amount
borrowed. Assume i(4) = 6%.

How much must you invest in equal amount each year for 10 years
starting now (i.e., years 0 through 9) if you want to be able to
withdraw $5,000 at end of eleventh year and increase annual
withdrawal by $1000 each year until year 25 yrs ? interest rate is
6% compounded annually

Question 1.
Part A: A firm has agreed to pay off a 10 year loan by making
ten $4,000 annual payments starting next year and a $100,000 lump
sum payment in 10 years. If the fair market interest rate is 6% how
much can they borrow?
Part B: The firm instead decides they would rather make 10 equal
annual payments starting next year with no lump sum in 10 years.
What annual payments must they make to borrow the same...

What is the present value of $10,000 to be received 10
years from today, assuming a 6 percent annual interest (discount)
rate?
2. If you
deposit $3,000 in a bank account that pays 4 percent annual
interest, what would your account balance equal after 9
years?
3. To
settle a wrongful death case, a judge ordered the maker of a
defective product to pay the spouse of the deceased person $100,000
today, $150,000 four years from today, and $250,000 eight...

Using Microsoft Excel: Suppose you are in the market for a new
car worth $22,000. You are offered a deal to make a $2,000 down
payment now and to pay the balance in equal end-of-month payments
of $505.33 over a 48-month period. Consider the following
situations.
(a) Instead of going through the dealer’s financing, you want to
make a down payment of $1,800 and take out an auto loan from a bank
at 9.2% compounded monthly. What would be your...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 59 seconds ago

asked 1 minute ago

asked 4 minutes ago

asked 4 minutes ago

asked 4 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 7 minutes ago

asked 8 minutes ago

asked 12 minutes ago

asked 12 minutes ago