Homework Answers
Number of months = 30 x 12 = 360
(a)
Cash flow diagram for monthly deposit of $D is as follows.
(b)
Monthly nominal interest rate = 4%/12 = 0.33%
Required deposit ($) = 1,200,000 / F/A(0.33%, 360) = 1,200,000 / 689.1223** = 1,741.35
**F/A(0.33%, 360) = [(1.0033)360 - 1] / 0.0033 = (3.2741 - 1) / 0.0033 = 2.2741 / 0.0033 = 689.1223
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Please show all work in legible writing, thank you
A couple wants to have $80,000 for their daughter to go to college in 15 years from now. How much money should they put in the bank monthly, if they are getting 6% annual interest compounded monthly? Draw the cash flow diagram a) b) What should be the amount of uniform deposit done monthly?
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3) (30 pts) A Mother wanted to provide her daughter with a college education so every monthly paycheck she put $200 into the bank. If the bank was giving her 6% annual interest, how much money will the daughter have towards college after 18 years of working? a) (10 pts). Draw the cash flow diagram. Negative money is out of your pocket. b) (20 pts) What will be the future amount of money in her college account?
help plz
4) (20 pts) A man decides to put a lump sum of money into a certified deposit for 5 years earning a monthly interest rate of 0.50%. He wants to have $4,000 to go on a vacation to Spain. How much money does he need to put into the certified deposit? (10 pts) Draw the cash flow diagram. Negative money is out of your pocket. a) b) (10 pts) What is the amount of money deposited initially?
3) If a company wants to have $1,200,000 in a contingency fund 30 years from now, the amount the company must deposit each year in years 1-10 at an interest rate of 6% is a. d) 20892 b. a) 22750 C. C) 56712 d. b) 28386 QUESTION 4 4) A deposit of $5,000 at an interest rate of 6% per year compounded quarterly will be equivalent to how much money 40 years from today (4 quarters per year)? a. b)...
help plz
1) (20 pts) A single investment of $8,000 is made today at the We Tief Your Money Bank account and will remain invested for twelve years. At the end of the twelfth year, what is the future value if it is simple interest of 5% annually. a) (10 pts) Draw the cash flow diagram. Negative money is out of your pocket. b) (10 pts) Find the future value after twelve years.
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Problem #2 (20 pts) 9=21 A man is planning to retire in 30 years. Money can be deposited at 12% Interest compounded monthly and it is also estimated that the future general inflation rate will be 2 per year. He wants to make annual withdrawals of $90,000 in terms of today's dollars over the 20 years of retirement. Assuming that his first withdrawal occurs at the beginning of the first year of retirement a How much money, in terms of...
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