Question

You open an investment account that pays 12% APR, compounded monthly. Compute the present value of 10 monthly payments of $5000 (the first payment made 1 month from today).

Answer #1

The question is based upon present value of annuity calculation. | |||||||||

Present value of 10 monthly payments | = | Monthly Payment x Present value of annuity of 1 | |||||||

= | $ 5,000.00 | x | 9.471305 | ||||||

= | $ 47,356.52 | ||||||||

So, | |||||||||

Present value of 10
monthly payments |
$ 47,356.52 |
||||||||

Working: | |||||||||

Present value of annuity of 1 | = | (1-(1+i)^-n)/i | Where. | ||||||

= | (1-(1+0.01)^-10)/0.01 | i | 1% | ||||||

= | 9.471305 | n | 10 | ||||||

Using a discount rate of 3.6% APR, compounded monthly, what is
the present value of a monthly perpetuity payment of $2,500 if: a)
The first payment is made today b) The first payment is made 12
months from now.

5. Using a discount rate of 4.8% APR, compounded monthly,
calculate the present value of a monthly perpetuity pay‐ ment of
$5250 if: (a) the first payment is made one month from now (2
pts.), (b) the first payment is made today (2 pts.), and (c) the
first payment is made 30 months from now (2 pts.).

Suppose an investor plans to make monthly deposits into an
account that pays 9% interest, compounded monthly, so that $100,000
will be in the account immediately after the payment at the end of
Year 10. The first payment will occur at the end of Month 1 (one
month from the present). How much must be deposited monthly

Suppose you have an account that pays an APR of 4% compounded
monthly. You begin putting $1000 per month into the account at age
30.
(a) What size nest egg do you build at age 65? Round to the
whole dollar.
(b) If your life expectancy at retirement is 25 years, what will
your monthly income be? Round to the whole dollar.

You have found three investment choices for a one-year
deposit:
10.2%
APR compounded monthly,
10.2%
APR compounded annually, and
9.4%
APR compounded daily. Compute the EAR for each investment
choice. (Assume that there are 365 days in the year.) (Note: Be
careful not to round any intermediate steps less than six decimal
places.)
The EAR for the first investment choice is
nothing%.
(Round to three decimal places.)

Compute the present value of an ordinary annuity that pays $100
quarterly for 3 years, given the investment is expected to earn 12%
compounded monthly.

You are planning to make monthly deposits of $50 into a
retirement account that pays 10 percent interest compounded
monthly. If your first deposit will be made one month from now, how
large will your retirement account be in 18 years?
Multiple Choice
$31,529.57
$360,337.93
$30,028.16
$27,359.50
$28,526.75

You are planning to make monthly deposits of $190 into a
retirement account that pays 7 percent interest compounded monthly.
If your first deposit will be made one month from now, how large
will your retirement account be in 20 years?

arnold deposits 300 at the end of each month into an account that
pays 14.4 compounded monthly. After he has made 96 payments,
arnold’s account contains 53572.25. After he made 240 payments,
Arnold’s account contains 412787.15. How much interest did Arnold
receive between his 96th payment and his 250th payment

What is the present value of the following annuity? $1,070 every
half year at the beginning of the period for the next 14 years,
discounted back to the present at 3.13 percent per year, compounded
semiannually.
You plan to buy a house in 14 years. You want to save money for
a down payment on the new house. You are able to place $348 every
month at the end of the month into a savings account at an annual
rate...

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