Question

1. What is the number, n, of periods? To prepare for their children’s future college expenses, a couple decides to deposit $100 at the end of every month into an account that pays 8% interest compounded monthly. How much will be accumulated after 18 years?

a. |
n = 6 |
||

b. |
n = 12 |
||

c. |
n = 18 |
||

d. |
n = 216 2. Ordinary Annuity or Annuity Due? A newly married couple decides to save $1500 per month for the purchase of a home. They make regular deposits at the end of each month into an account that pays 6.5% interest compounded monthly. If they maintain this plan for 5 years, how much money will be in this account? a. ordinary annuity b. annuity due c. neither |

Answer #1

As a savings plan to guarantee their child's college education, a couple decides to deposit $ 100 a month into a bank account that pays interest at a rate of 6% per year compounded monthly. If the savings plan started when the child was 6 years old, how much money will he have accumulated when he turns 18?
Please show process.

After graduating college, Jon finds a job and decides to start
saving for retirement. He deposits 1180 at the end of each month
into a retirement account that pays 5.8% interest compounded
monthly. After 5 years, he moves the investment to a mutual fund
which pays 7.3% compounded monthly and increases his monthly
deposit to 2000.
Find the amount Jon will have on deposit 5 years after that (10
years after graduation).

3. Nancy just had a new baby boy and plans to send him to
college 18 years from now. She wants to deposit each winter in an
education account which pays 11% (compounded annually) so that her
boy will have enough money set aside that he can take out $20,000
at the beginning of each year to pay tuition, room and board, etc.,
for each of his five-year integrated master degree in finance. How
much will Nancy need to deposit...

5-1
FUTURE VALUE If you deposit $10,000 in a bank
account that pays 10% interest annually, how much will be in your
account after 5 years?
5-2
PRESENT VALUE What is the present value of a
security that will pay $5,000 in 20 years if securities of equal
risk pay 7% annually?
5-3
FINDING THE REQUIRED INTEREST RATE Your parents
will retire in 18 years. They currently have $250,000, and they
think they will need $1,000,000 at retirement. What annual...

a. The effective interest
rate is 21.44%. If there are 12 compounding periods per year, what
is the nominal interest rate?
b. What is the effective interest
rate on a continuously compounded loan that has a nominal interest
rate of 25%?
c. Which is the better
investment, a fund that pays 20% compounded annually, or one that
pays 18.5 % compounded continuously?
d. Money invested at 6% per year,
compounded monthly. How money months you need to triple your
money?...

In
order to accumulate enough money for a down payment on a house, a
couple deposits $367 per month into an account paying 6% compounded
monthly. If payments are made at the end of each period, how much
money will be in the account in 7 years?
Amount in the account=
How much interest earned=

Please show all of the factors used in the calculation – PV,
I/Y, N, etc. – NOT just the answer.
If the calculation involves an annuity, please indicate if it is
an ordinary annuity or an annuity due. a. On January 1, 2019 Tom
Jeffers come to you, his CPA, and tells you he wants to retire in
10 years. His life expectancy is 20 years from his retirement. How
much should he deposit on December 31, 2028 to be...

Jennifer has
$7,000
invested in a money market account
that pays 1.5% interest compounded monthly at the end of
each month. She makes deposits at the end of each month
of
$150
. How much will she have in the account
after 3 years?

7. Future value of annuities
There are two categories of cash flows: single cash flows,
referred to as “lump sums,” and annuities. Based on your
understanding of annuities, answer the following questions.
Which of the following statements about annuities are true?
Check all that apply.
A perpetuity is a constant, infinite stream of equal cash flows
that can be thought of as an infinite annuity.
An annuity due earns more interest than an ordinary annuity of
equal time.
An annuity...

For 20 years Jenny deposits $500 at the end of each month in an
account earning 4.5% per year compounded monthly.
How much will she have in the account in 20
years?
How much interest did she earn in this 20 year
period?
for the next 25 years Jenny neither deposits nor withdraws any
money while the account continues to earn 4.5% per year compounded
monthly.
How much does Jenny have in the account after
these 25 years?
How much...

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