Question

Suppose that you drive 30, 000 miles per year and gas averages $4 per gallon. Complete parts a. and b. below.

a. What will you save in annual fuel expenses by owning a hybrid car averaging 30 miles per gallon rather than an SUV averaging 9 miles per gallon?

b. If you deposit your monthly fuel savings at the end of each month into an annuity that pays 4.8% compounded monthly, how much will have saved at the end of eight years?

Answer #1

Suppose a person has contributed $2,000 per year for 30 years at
6% interest rate and then retired. The balance in the account is
then used to purchase an annuity which will make a payment at the
end of each month for the following 20 years, completely exhausting
the account. The annuity pays 7.29% compounded monthly. What will
the amount of the monthly payment be?
PLEASE SHOW WORK

You deposit $4,000 in the bank at the end of each year for 30
years. If the bank pays interest of 5.25% per annum, what amount
will you have accumulated if interest is compounded:
a. Annually
b. Semi-Annually
c. Quarterly
d. Monthly
e. Daily
Please show all your work and explain your answers.

You deposit $2,500 per year at the beginning of each of the next
30 years into an account that pays 6% compounded annually. How much
could you withdraw at the end of each of the 20 years following
your last deposit if all withdrawals are the same dollar amount?
(The 30th and last deposit is made at the beginning of the 20-year
period. The first withdrawal is made at the begining of the first
year in the 20-year period.)

QUESTION 9
Suppose you plan to retire at age 70, and you want to be able to
withdraw an amount of $83,000 per year on each birthday from age 70
to age 100 (a total of 31 withdrawals). If the account which
contains your savings earns 5.4% per year simple interest, how much
money needs to be in the account by the time you reach your 70th
birthday? (Answer to the nearest dollar.)
Hint: This can be solved as a...

Suppose that you are 30 years old, and making retirement plans.
You are starting to contribute $500 per month to your retirement
account at the beginning of each month. You intend to do so until
the age of sixty seven and then stop the contributions. You will
retire at age 70 and want to know how much you'll have saved. You
receive a 7% APR compounded monthly on your account.
a) How much will you have if you allow interest...

Happy birthday! You are 30 years old today. You want to retire
at age 60. You want to have
$1,800,000 at retirement. Realistically, you know that the
most that you can save from your 31st birthday until your 50th is
$5,500 per year (you only save on your birthdays!). How much do
you have to save each year from your 51st to your 60th birthday in
order to achieve your retirement goal if you can earn 6% on your...

Suppose you earned a $435,000 bonus this year and invested it at
8.25% per year. How much could you withdraw at the end of each of
the next 20 years?
Select the correct answer.
a. $45,114.15
b. $45,123.65
c. $45,133.15
d. $45,152.15
e. $45,142.6
Suppose you just won the state lottery, and you have a choice
between receiving $3,550,000 today or a 20-year annuity of
$250,000, with the first payment coming one year from today. What
rate of return is...

What is the future value of $10,000 after 15 years when
investing 4%?
What is the future value in the preceding problem if the
interest is compounded monthly?
What is the future value after 22 years of year-end deposits of
$50,000 earning 3%?
What is the future value in the preceding problem if deposits
are year-beginning?
What is the most you should pay today for a piece of land which
will be worth $500,000 in 4 years if you want...

1. You need a 20-year, fixed-rate mortgage to buy a new home for
$240,000. Your mortgage bank will lend you the money at a 8.1
percent APR for this 240-month loan. However, you can afford
monthly payments of only $900, so you offer to pay off any
remaining loan balance at the end of the loan in the form of a
single balloon payment. Required: How large will this balloon
payment have to be for you to keep your monthly...

2. Suppose you will receive $1,000 in 4 years. If your
opportunity cost is 6% annually, what is the present value of this
amount if interest is compounded every six months? (8 points) What
is the effective annual rate? (8 points) 3. Suppose you have
deposited $10,000 in your high-yield saving account today. The
savings account pays an annual interest rate of 4%, compounded
semi-annually. Two years from today you will withdraw R dollars.
You will continue to make additional...

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