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
that time. If your savings can earn 4% , how much will you need to
save each year starting at the end of this year, in order to reach
your goal? Round to the nearest cent. [Hint: We are trying to
solve for the cash flows of an annuity. The formula we need to use
is dictated by whether we are given the PV or the...

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:
You just inherited $1,000,000. Instead of taking a lump sum, a
financial planner has suggested two additional options. First, you
invest in an annuity that will pay you $125,000 per year for 10
years. The discount rate is...

Using the table provided, if you agree to make three annual
payments of $6,000 each for a piece of equipment, with an
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...

You plan on saving $10,000 a year (as a regular annuity)
for the next 30 years. You will then make equal
withdrawals for each of the next 25 years (also a regular
annuity). If the interest rate is 10% over the first 30
years but only 8% for the remaining 25 years, what will be the
amount of each withdrawal?

Suppose the opportunity cost of capital is 5% and you have just
won a $750,000 lottery that entitles you to
$75,000 at the end of each year for the next 10 years.
What is the minimum lump sum cash payment you would be willing
to take now in lieu of the IO-year annuity?
What is the minimum lump sum you would be willing to accept at
the end of the 10 years in lieu of the annuity?
Using the appropriate...

14.a You bought an
annuity that pays $1,000 at the (a) end
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)
beginning of each year for 5 years. If you can earn 6% on
your...

Calculator
Problem:
1= You are tired of
working. Since you have $750,000 invested at 6.4%, you decide to
quit your job and enjoy life for a while. You want to withdraw
$50,000 at the beginning of each year, starting this year. You also
wants to have $75,000 left when you begin your hunt for a new job.
For how many years can you make the $50,000 withdrawals and still
have $75,000 left in the end?
2-
Calculator
problem:
Suppose you...

Each question will be labeled as a calculator or formula
question.
For calculator problems , you are to label and input all the
variables of interest: N, I/Y, PV, PMT, FV (and Begin mode if you
switch). the unknown variable should be indicated by a ? symbol.
Once solved, rewrite the variable identifier with the correct
answer.
For the formula problems, set up the problem and solve. Be sure
to show each step for credit.
Answer each question in BB...

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