Question

Answer the following:

A. Suppose you are trying to accumulate a balance of $10,000 by
the end of 8 years. You are trying to figure out how much you would
have to save **at the beginning of each year for the next 8
years** in an account earning 3% interest to reach your
target. Which formula would you use to solve for the cash
flows?

FV of an annuity

PV of an annuity

FV of an annuity due

PV of an annuity due

PV of a perpetuity

B. Suppose you have $10,000 in an account earning 3% interest per year. You would like to make annual withdrawals at the end of each year for the next 8 years. You are trying to figure out the most you could withdraw annually without depleting the account before 8 years. Which formula would you need to use to solve for the cash flows?

FV of an annuity due

PV of an annuity due

FV of an annuity

PV of an annuity

PV of a perpetuity

Answer #1

A). Amount needed in 8 years is $10000

So, Future value needed is $10000

Annual deposit are made at start of each period. So it is an annuity due.

So, we use formula of FV of an annuity due to calculated the annual payment.

Option C is correct.

B). Amount available now = $10000

So, present value = $10000

Annual withdrawal are made at the end of each year for next 8 years. So it is an ordinary annuity.

So formula used to calculated annual withdrawal is PV of an annuity.

Option D is correct.

Suppose that you deposit? $10,000 in an account that pays? 6%
interest and you want to know how much will be in your account at
the end of 10 years. To solve this problem in Microsoft? Excel, you
would use which of the following Excel? formulas?
=FV?(.06,10,0,10000)
B.
?=PV?(.06,10,0,10000)
C.
?=PV?(.06,10000,0,10)
D.
?=FV?(.06,10000,0,10)

You
take out an amortized loan for $10,000. The loan is to be paid in
equal installments at the end of each of the next 5 years. The
interest rate is 8%. Construct an amortization schedule.
A.
Calculate the PV of $100 due in 5 years compounded daily at
12%.
B. Calculate the FV of $1000 due in 3 years at 6% compounded
quarterly.
C. Calculate the FVA of $300 due at the end of each of the next 5...

In 10 years you’d like to buy a boat that will cost $500,000 at
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Using the table provided, if you agree to make three annual
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incremental borrowing rate of 8%, how much will you record the
purchase price of the equipment for assuming first you make the
annual payment at the end of each year and next you make the annual
payment at the beginning of each year.
PV single sum 3 periods 8%
------------ .79383
PV single sum 6 periods...

Are you able to answer this in terms of how to solve using a
financial calculator? What to enter for [N, I/YR, PV, PMY, FV] as
well as how you determined these numbers? Please verify answer
below and explain any discrepancies.
Question:
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You plan on saving $10,000 a year (as a regular annuity)
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amount of each withdrawal?

Suppose the opportunity cost of capital is 5% and you have just
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What is the minimum lump sum cash payment you would be willing
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What is the minimum lump sum you would be willing to accept at
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Using the appropriate...

You need to accumulate $10,000. To do so, you plan to make
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14.a You bought an
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and (b) beginning of each year next 5 years. If
you can earn 6% on your money in other investments with equal risk,
the future value (FV) of this kind of annuity is (a)
$(
)
or (b)
$(
_).
14.b You bought an
annuity that pays $1,000 at the (a) end or (b)
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Calculator
Problem:
1= You are tired of
working. Since you have $750,000 invested at 6.4%, you decide to
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