Question

Your grandmom wishes to create an account that would start donating $11,200 per year to a hospital for an indefinite period of time beginning today. If the interest rate is 3.90% , how much does she need to put in that account?

a.

$310,016

b.

$275,979

c.

$276,400

d.

$298,379

e.

$287,179

Answer #1

- Grandmom wishes to donate $ 11,200 per year in perpetuity from today through an account.

We will calculate the Present Value of Perpetuity payments, while calculating the Present Value of Perpetuity payments we take cashflow at year end but since Grandmom wishes to donate from today we will add the Cashflow the will take place today to the Present value.

Calculating the Present Value of Perpetuity payments:-

Present Value = (Annual Cashflow/Interest rate) + Annual Cashflow

Present Value = ($11,200/3.90%) + $11,200

Present Value = $287,179.49 + $11,200

Present Value = $298,379.49

**So, the amount she need to put in that account is
$298,379**

**Option D**

*If you need any clarification, you can ask in
comments. *

**If you like my answer, then please up-vote as it
will be motivating *** *

You decide to start investing in a savings account that earns 5%
per year. One year from now, you plan on depositing $3,000 into the
account, with the expectation that these deposits will grow by 2%
each year for four years. What is the present value of this stream
of cash flows? How much will you have at the end of the deposit
time period?

Your cousin is currently 12 years old. She will be going to
college in 6 years. Your aunt and uncle would like to have $
120,000 in a savings account to fund her education at that time. If
the account promises to pay a fixed interest rate of 4.5 % per
year, how much money do they need to put into the account today to
ensure that they will have $ 120,000 in 6 years?

Betty plans to begin saving one year from today. She will
contribute $12,000 per year for 35 years and estimates that he can
earn an annual rate of 6% on his savings. How much does she expect
to have in 35 years?
$1,325,217
$1,337,217
$1,424,710
$1,471,437
None of the above
Tam needs $4,000,000 when you retire in 40 years and can earn 8%
on all invested funds. She will start contributing to your
retirement account in a month. How much...

an account paying annual interest was ooened with OMR2000 10
years ago. today, the account balance is OMR 3500. if the same
interest rate is offered on an account paying simple interest, how
much income would be earned each year over the same time period? a.
92.6 b.150 c.56.90 d. 80.40 e.115.20

an account paying annual interest was ooened with OMR2000 10
years ago. today, the account balance is OMR 3500. if the same
interest rate is offered on an account paying simple interest, how
much income would be earned each year over the same time period? a.
92.6 b.150 c.56.90 d. 80.40 e.115.20

A student needs fees of 30000 per year, to be paid at the start
of each year for 3 years. She will also need 5000 per month living
expenses, starting now. Interest is calculated at 8% compounded
monthly.
a) What is the effective interest rate?
b) How much capital must parents have to pay the fees?
c) How much capital must parents have to pay the living
expenses? How much capital do the parents need altogether?

1.What is the present value of $14,000 ?received:
a. 28 years from today when the interest rate
is 4% per? year?
b.14 years from today when the interest rate is
4% per? year?
c. 7 years from today when the interest rate is
4% per? year?
a. 28 years from today when the interest rate
is 4% per? year?
2. Your cousin is currently 8 years old. She will be going to
college in 10 years. Your aunt and uncle...

$____________3. Your father wishes to retire in 27 years. If he
can invest $2,000 per year into an Individual Retirement Account
(IRA) how much will he have in this account when he retires if the
money accumulates at an annual interest rate of 7.5% compounded
annually?

8) Your client is 25 years old and wants to start receiving
payments of $100,000 per year when she retires on her 60th birthday
until her 89th birthday. As her financial advisor, how much must
she invest every year staring today to achieve her goal if she can
earn 7 percent annual interest?
9)
Calculate the expected rate of return for an investment of
$550,000. What does the expected rate of return mean?
Dollar amount of Return
Probability of...

You plan to save $1000 per year in your retirement account
beginning today. You expect your retirement account has a 6% annual
return. How much will you have in your retirement account 25 years
from now (Note: this is an annuity due)?
Suppose the U.S. Treasury offers to sell you a bond for $900.
No payments will be made until the bond matures 3 years from now,
at which time it will be redeemed for $1,000. What interest rate...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 25 minutes ago

asked 36 minutes ago

asked 45 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 3 hours ago