Question

Now a person who is 40 years old wants to buy a house that will cost...

Now a person who is 40 years old wants to buy a house that will cost 12000 dollars when he turns 65. Now that the bank has 3000 dollars in money and the semi-annual compound can fulfill this request for 6% annual nominal interest rate?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

We are given the following information:

Value of account at time 0 PV $       3,000.00
rate of interest r 6.00%
number of years n 25
Semi Annual Compounding frequency 2
Future value FV To be calculated

We need to solve the following equation to arrive at the required FV

So the FV is $13151.72 which is more than sufficient to cover the 12000 cost of the new house so 6% interest rate is sufficient.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A person wants to buy a house after seven years by making semiannual deposits of $...
A person wants to buy a house after seven years by making semiannual deposits of $ 40,000 in a bank account that pays 10%. 1) Compute the price of the house. 2) Three years later, directly after making the sixth payment, the person passed away. His son decided to buy the house on the same day that his father wanted to buy it. However, he noticed that his father’s payments did not take into consideration the inflation rate of 5%...
Charlie is 40 years old and has $450,000 in his savings and he wants to use...
Charlie is 40 years old and has $450,000 in his savings and he wants to use some of the money to buy a house. His goal is to have $1,500,000 in his account by the time he reaches 65. How much should he leave in his account if he earns a 12% APR compounded monthly?
An individual wants to retire in 15 years when he turns 65. He wants to have...
An individual wants to retire in 15 years when he turns 65. He wants to have enough money to maintain his current income, which is $55,000 per year. It is assumed that a 6% annual investment rate of return and a 4% inflation rate per year. He expects that he will live to be 90 years old. He expects his raises to equal the inflation rate, approximately how much does he need at retirement to fulfill his retirement goals? (...
Derrick wants to buy a new house that costs 100,000, he plans to finance it with...
Derrick wants to buy a new house that costs 100,000, he plans to finance it with monthly payments over 9 years. Interest: 6% (annual) What will be the monthly interest payment be once the first month has been paid?
Your client is 40 years old, and she wants to begin saving for retirement, with the...
Your client is 40 years old, and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 9% in the future. If she follows your advice, how much money will she have at 65? You have $50,000 to put as a down payment on a new house...
Ray is 27 years old today. He is a conservative person, and is thinking about his...
Ray is 27 years old today. He is a conservative person, and is thinking about his retirement when he reaches the age of 70. He decides to invest $7,000 at regular annual intervals for 15 years, starting from today. The fund that he is investing in will give him a return of 7.4% per annum. He will then leave the money in the account to grow further until he retires when he is 70 years old. How much will Ray...
Al Derover wants to buy a used vehicle in five years. He estimates the cost will...
Al Derover wants to buy a used vehicle in five years. He estimates the cost will be $12,000. If he invests $8,500 now at a rate of 10% compounded semiannually, how much will he have? Will he have enough money to buy the vehicle at the end of five years? (Round your answer to the nearest cent.)
Toby wants to buy a dirt bike in 5 years. If he saves $700 per month,...
Toby wants to buy a dirt bike in 5 years. If he saves $700 per month, what is the purchase price of the bike that he can afford in 5 years if he can receive an annual nominal interest rate of 3% compounding monthly in to a savings account?
Assume you are 40 years old and wish to retire at age 65. You expect to...
Assume you are 40 years old and wish to retire at age 65. You expect to be able to average a 6% annual rate of interest on your savings over your lifetime (both prior to and after retirement). You would like to save enough money to provide $8,000 per year beginning at age 66 in retirement income to supplement other sources (Social Security, pension plans, etc.) Suppose you decide to that the extra income needs to be provided for only...
Alexis want to buy a house in 5 years. She wants to save $75,000 over the...
Alexis want to buy a house in 5 years. She wants to save $75,000 over the next five years for a down payment. If she can earn an annual rate of 9% on her savings, how much must she deposit in equal payments at the end of each month for the next five years to reach her goal? A) $1,250                    B) $765.87                  C) $994.38                  D) $8,420.13 Alexis is ready to buy her house. She will purchase the $450,000 house with...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT