BE6-3 (L02) Candice Willis will invest $30,000 today. She needs $150,000 in 21 years. What annual interest rate must she earn?
BE6-6 (L03) Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 5% interest, to meet his needs?
BE6-7 (L02) John Fillmore’s lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 8% (compounded annually) to buy the boat at retirement?
BE6-8 (L02) Refer to the data in BE6-7. Assuming quarterly compounding of amounts invested at 8%, how much of John Fillmore’s inheritance must be invested to have enough at retirement to buy the boat?
BE6-9 (L03) Morgan Freeman is investing $9,069 at the end of each year in a fund that earns 5% interest. In how many years will the fund be at $100,000?
BE6-15 (L05) Clancey Inc. issues $2,000,000 of 7% bonds due in 10 years with interest payable at year-end. The current market rate of interest for bonds of similar risk is 8%. What amount will Clancey receive when it issues the bonds?
Answer to BE6-3:
Amount invested = $30,000
Future value = $150,000
Period = 21 years
Let annual interest rate be i%
Amount invested * (1 + Interest rate)^Period = Future
value
$30,000 * (1 + i)^21 = $150,000
(1 + i)^21 = 5
1 + i = 1.0797
i = 0.0797 or 7.97%
Interest rate = 7.97%
Answer to BE6-6:
Future value = $250,000
Period = 10 years
Interest rate = 5%
Let annual deposit be $x
$250,000 = $x*1.05^9 + $x*1.05^8 + … + $x*1.05 + $x
$250,000 = $x * (1.05^10 - 1) / 0.05
$250,000 = $x * 12.57789
$x = $19,876.14
Annual deposit = $19,876.14
BE6-3 (L02) Candice Willis will invest $30,000 today. She needs $150,000 in 21 years. What annual...
please show me how to solve using a financial calculator if possible....thanks in advance BE6.7 (LO 2) John Fillmore's lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $400,000. He estimates that the boat he wants will cost $300,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 8% (compounded annually) to buy the boat at retirement?...
1) Julia Willis will invest $24,900 today. She needs $63,826 in 24 years. What annual interest rate must she earn? (Round answer to 0 decimal places, e.g. 7%.)
Brief Exercise 6-5 Stacy Medavoy will invest $5,500 a year for 19 years in a fund that will earn 10% annual interest. Click here to view factor tables If the first payment into the fund occurs today, what amount will be in the fund in 19 years? If the first payment occurs at year-end, what amount will be in the fund in 19 years? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to decimal places, e.g....
Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,200 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? $52,000.00 $49,400.00 $46,930.00 $40,152.84 $104,000.00
John starts his career at 21 years old and expects to retire 44 years later at the age of 65. His first annual salary is $72,000 that will increase at 1.5% per year until he finishes his part-time MBA at 28 years old. With his MBA, John expects salary to increase at 3% per year until retirement. At the end of each year, he deposits 10% of his annual salary into a retirement saving plan that pays 6% interest per...
Marshall has received an inheritance and wants to invest a sum of money today that will yield $5700 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (Use appropriate factor(s) from the tables provided.) A) $44,013.69 B) $114,000.00 C) $54,150.00 D) $57,000.00 E) $51,442.50
Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
her secured investments. How much should she invest today to meet this purpose? 3. Amna wants to deposit $5000 into a saving fund at the beginning of each month. If she can earn 12% compounded interest semiannually how much amount will be there in he saving fund at the end of 8 years?
Please solve the following time value of money problem: John's Retirement Contribution John, 22 is about to begin his career as a rocket scientist for a NASA contractor. Being a rocket scientist, John knows that he should begin saving for retirement immediately Part of his inspiration came from reading an article on Social Security in Newsweek. The article indicated that the ratio of workers paying taxes to retirees collecting checks will drop dramatically in the future. In fact, the number...
John is planning to buy a house in three years. He thinks he needs to put down $55,000 in three years as a down payment. Currently John has $15,000. He would like to start saving in a bank that offers 8% annual interest rate. How much should John save every month into that bank account so that he can accomplish his goal?