Question

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A. If you want to have $2,000 for a vacation in 1½ years, how much do you need to save per month? The accounts yields 12%?

B. Is the bond in question A discount or premium bond?

If an individual can save $1,500 annually, how much will have been accumulated after 4 years if the funds earn 7 percent?

If Sam contributes $3,000 annually in a retirement account that earns 9 percent a year, how much will Sam have in his account in 20 years?

You have a US corporate bond with a coupon rate of 8% and matures in 12 years. Comparable bonds now pay 5%, what is a fair market price for your bond for if you were to sell it?

Answer 1

A) We have to save $101 per month for 1.5 years.

b) the bond is Premium, for answer A&B below is Calculations

MONTHS	MONTHLY SAVE	OPENING BALANCE	INTEREST PAID	PRINCIPAL+INTEREST	PV
1	101.00	101.00	1.01	102.01	$101.00			Fixed Monthly Save	101
2	101.00	203.01	2.03	205.04	$201.00			Monthly save & Principal+Interest	102.01+101=203.01
3	101.00	306.04	3.06	309.10	$300.01			Cummulative Interest Earn on Opening Balance	203.01*12%/12=2.03
4	101.00	410.10	4.10	414.20	$398.04			Principal+Interest	203.01+2.03=205.04
5	101.00	515.20	5.15	520.35	$495.10			Present Value of (Principal+Interest)	PV(12%/12,A3,0,E3)
6	101.00	621.35	6.21	627.57	$591.20
7	101.00	728.57	7.29	735.85	$686.34
8	101.00	836.85	8.37	845.22	$780.55
9	101.00	946.22	9.46	955.68	$873.82
10	101.00	1056.68	10.57	1067.25	$966.17
11	101.00	1168.25	11.68	1179.93	$1,057.60
12	101.00	1280.93	12.81	1293.74	$1,148.13
13	101.00	1394.74	13.95	1408.69	$1,237.76
14	101.00	1509.69	15.10	1524.79	$1,326.51
15	101.00	1625.79	16.26	1642.04	$1,414.37
16	101.00	1743.04	17.43	1760.47	$1,501.37
17	101.00	1861.47	18.61	1880.09	$1,587.51
18	101.00	1981.09	19.81	2000.90	$1,672.79

$1500 interest 7% for 4 Years. after 4 years will be $1966.19

YEAR	OPENING BALANCE	INTEREST PAID	PRINCIPAL+INTEREST
1	1500.00	105.00	1605.00
2	1605.00	112.35	1717.35
3	1717.35	120.21	1837.56
4	1837.56	128.63	1966.19

If Sam contributes $3,000 annually in a retirement account that earns 9 percent a year, how much will Sam have in his account in 20 years? $167293.59, below is calculations.

YEAR	YEARLY SAVE	OPENING BALANCE	INTEREST PAID	PRINCIPAL+INTEREST
1	3000.00	3000.00	270.00	3270.00
2	3000.00	6270.00	564.30	6834.30
3	3000.00	9834.30	885.09	10719.39
4	3000.00	13719.39	1234.74	14954.13
5	3000.00	17954.13	1615.87	19570.00
6	3000.00	22570.00	2031.30	24601.30
7	3000.00	27601.30	2484.12	30085.42
8	3000.00	33085.42	2977.69	36063.11
9	3000.00	39063.11	3515.68	42578.79
10	3000.00	45578.79	4102.09	49680.88
11	3000.00	52680.88	4741.28	57422.16
12	3000.00	60422.16	5437.99	65860.15
13	3000.00	68860.15	6197.41	75057.57
14	3000.00	78057.57	7025.18	85082.75
15	3000.00	88082.75	7927.45	96010.20
16	3000.00	99010.20	8910.92	107921.11
17	3000.00	110921.11	9982.90	120904.01
18	3000.00	123904.01	11151.36	135055.38
19	3000.00	138055.38	12424.98	150480.36
20	3000.00	153480.36	13813.23	167293.59