E Activity # 3Solve each word problem.1. Mr. Rosales deposits P75,000 at the end of each month in a bank which pays 9% compounded monthly.no withdrawals are made, how much could he expect to have after 4 years?2. A certain fund currently has P100,000 and is invested at 3% interest compounded annually. How muchwithdrawal can be made at the end of each year so that the fund will have zero balance at the end ofyears?3. What is the present value of an annuity of P150,000 payable at the end of each 6-month period for 2 yeaif money is worth 8% compounded semiannually?4. ABC bank pays interest at the rate of 2% compounded quarterly. How much will Ken have in the bank atthe end of 5 years if he deposits P3,000 every month?5. At the beginning of each quarter, P36,000 is deposited into savings account that pays 6% compoundedsemiannually. Find the balance in the account at the end of three years.yot oub yiunno

Honor code: Since you have asked multiple questions, we will solve the first question for you. If…

Answered: Ar. Rosales deposits P75,000 at the end…

Ar. Rosales deposits P75,000 at the end of each month in a bank which pays 9% compounded month ho withdrawals are made, how much could he expect to have after 4 years?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 2STP

See similar textbooks

Related questions

Q: How would a $4,000 increase in AR and a $2,000 decrease in inventory affect cash? Select one: a. $...

A: The increase in current assets leads to a decrease in the cash which uses the existing cash of the o...

Q: The cash flows shown in the table below occur every six months (bi-annually) and have a total presen...

A: Present value of annuity is the current value of the future payments that are calculated using the i...

Q: How long will the given principal P take to reach the aiven maturity value A at the given simple int...

A: Number of years in simple interest = (1/r) x [(A/P) - 1] A = Total accrued amount (Interest + Princi...

Q: 5.31 2021 7.80 The current interest rate on new debt is 12%; Foust's marginal tax rate is 25%; and i...

A: Cost of Debt: It represents the cost of raising debt capital from the investors. The company pays co...

Q: ance.perhaps you have come across behavior or aspect of financial market that you think can be bette...

A: Introduction : In simple words, behavioral finance refers to the study branch of finance which deals...

Q: Which of the type of insurance pays benefits to workers who suffer an injury on the job? Select the ...

A: Insurance is an agreement in which an individual or organization obtains financial security or compe...

Q: 2. Suppose you bought a condo for $200,000 financing it with a $40,000 down payment of your own fund...

A: 1. Calculation of Return on Assets (ROA) as follows: Cost of Condo = $200,000 Down payment = $40,000...

Q: Laursen plc has announced a 1 for 3 rights issue at a subscription price of £2. The current price of...

A: Theoretical value of the right =(Stock Price - Rights subscription price per share) / (Number of rig...

Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a...

A: Risk-free rate = 8% Expected return on stock fund = 19% Expected return on bond fund = 12% Standar...

Q: Suppose that you decide to borrow $13,000 for a new car. You can select one of the following loans, ...

A: Amont to be borrowed(P) is $13,000 Loan A is 3 year loan with Interest rate of 6.3% Loan B is 5 year...

Q: National Co. sells on terms 3/10, net 30. Total sales for the year are P900,000. Thirty-five percent...

A: Sales = P 900000 35% pay on 10th day and 65% pay on 45th day. Let's find the days sales outstanding.

Q: How long will it take P 3,000 pesos to accumulate P 3,500 in a bank savings account at 0.25% compoun...

A: Present value (PV) = P3000 Future value (FV) = P3500 Interest rate = 0.25% Monthly interest rate (r)...

Q: A man bought a lot worth P1.4M if paid in cash. On the installment basis, he paid a down payment of ...

A: It is related to the concept of time value of money. The concept says that the certain sum of money ...

Q: A city is spending $20 million on a new bridge. Operating and maintenance expenses for the bridge ar...

A: First cost (C) = $20 million Annual cost (A) = $0.6 million from year 3 Major repairs cost (R) = $1....

Q: 3. (Future value of an ordinary annuity) What is the future value of each of the following streams o...

A: a. Calculate the future value of ordinary annuity by using the EXCEL FV function: Working: Thus, t...

Q: example of exact interest and explain in 5 sentences when and where to apply this

A: Interest is the amount of money gained by an investor or lender in addition to the principal amount ...

Q: Clay Jensen is evaluating whether to purchase one of 2 different stocks and is considering the inves...

A: Investing is putting your money to work for you in the future. Stocks are one of the investment alte...

Q: Styles QUESTION 3 Alan, a chartered financial analyst (CFA), is willing to invest two stocks, Bloom ...

A: Expected Return is the return that investor expects from a stock under various conditions based on t...

Q: A customer deposits money into a bank which was able to create $10 000 000 in credit from it. The RR...

Q: Calculate the yield to maturity of zero coupon bond. Scenic City issued bonds to build hypermark...

A: Par Value of Zero Coupon Bond is 100 Pesos Current Price of Zero Coupon Bond is 70 Pesos Time to Mat...

Q: and you cannot cancel on the due date, so you must cancel with a delay of 25 days, it is requested: ...

A: Interest is the fee paid to a lender for using the funds. It is the compensation paid to an investor...

Q: B. UNDERSTANDING: B.1 Direction: Solve and show your complete solution on the following problems. Us...

A: The income for bond investors comes in the form of coupon payments which remains constant over each ...

Q: Local Co. has sales of $10.7 million and cost of sales of $6.4 million. Its selling, general and adm...

A: Answer- First three subparts solved. Part a) Calculation of Gross Margin - GIven, Sales = $10.70 ...

Q: See the cash flow statement LOADING... (all values in thousands of dollars) (see MyLab Finance for t...

A: Cashflow means movement of cash and this movement can be positive or negative. Positive movement mea...

Q: QUESTION 3 Alan, a chartered financial analyst (CFA), is willing to invest two stocks, Bloom stock a...

A: Portfolios: A portfolio is a collective noun given to the holdings an individual has in selected sec...

Q: payout is 40 percent? SECTION-D (Compulsory) (115=15) 15. A company is considering two mutually exc...

A: Before investing in new assets, profitability of the project is evaluated by using various methods l...

Q: 14. The GJE company has a contract with a hauler to transport its naphtha requirements of 3,600,000 ...

A: Working Note #1 Calculation of Depreciation: Depreciation = (First cost - Salvage value) / Life Depr...

Q: If you have $4500 to invest now, and will need a total of $25,000 -- 10 years from now, determine ho...

A: Amount available now (PV) = $4500 Period = 10 Years Monthly period (n) = 10*12 = 120 Interest rate =...

Q: Consider the decision to purchase either a five year corporate bond or a five year municipal bond. T...

Q: (Related to Checkpoint 5.2) (Future value) Leslie Mosallam, who recently sold her Porsche, placed $1...

A: Compounding is a technique to compute the future value (FV) of present cashflows by considering a ra...

Q: 1. How do you use the Johnson & Scholes framework to determine the optimal strategy choice? 2. How d...

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new que...

Q: Juju Corporation buy Bilu bonds for 20 years and has been issued 12 years ago at a coupon rate of 7%...

A: Hi, Thanks for the Question. Since you asked multiple sub parts question, we will provide the soluti...

Q: JJ Industries will pay a regular dividend of $2.90 per share for each of the next four years. At the...

A: A model that helps to evaluate the value of the stock by discounting the dividend earned on the stoc...

Q: (Refer to this word problem for items #1-6) Determine the exact and ordinary interest on P15,800 at ...

A: Exact Interest - Under exact interest calculation 365 days is considered in one year. Interest Can b...

Q: Both of Firm A and Firm B are 100 equity firms. You estimate that the incremental value of the acqui...

A: Merger is the concept of two or more company combined together and form a new company or one company...

Q: If you deposit $100 in an account earning 6%, how much would you have in the account after 1 year? P...

A: Future Value: The future value is the amount that will be received at the end of a certain period. T...

Q: solve the given annuity: P1,500 deposited at the beginning of each month for 2 years at 9% compounde...

A: Since it is not mentioned in the question, it is solved for present value as well as future value al...

Q: *The sinking fund factor is the reciprocal of the uniform-series compound amount factor.

A: The sinking fund factor is a measure to calculate the future value of equal annual cash flows series...

Q: See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco ...

A: Here, Net Income of 2019 is $28.5 millions No. of Share Outstanding is 53.1 millions No. of Shares r...

Q: Assuming a 8% discount rate throughout: Beginning today (time 0), you deposit $5,000 (per period) i...

A: Hi, the calculations in part c are done using the Goal seek function of excel to determine the value...

Q: Given the following spot rates, calculate the value of a 3-year, 6% annual-coupon bond. Spot rates:...

A: Time period is 3 years Annual Coupon rate is 6% To Find: Value of the bond

Q: Please solve the problem max in 30-60 minutes max. I'm waiting please. Thank u 1. A company partiall...

A: Cost of Debt: It is that interest rate paid by companies on its debts. This rate is provided to thes...

Q: A manufacturing company purchased electrical services for the next 5 years to be paid for with $70,0...

A: The question is based on the concept of the present value of expected future cost. The advance payme...

Q: Explain liquidity risk and how it can affect financial institutions, and discuss the framework used ...

A: In financial terms, risk is defined as the likelihood that the real profits from a result or investm...

Q: Find the EAR in each of the following cases. (Do not round intermediate calculations and enter your ...

A: An effective annual rate of interest or E.A.R. is the interest which is earned in real times over a ...

Q: Future Value - single sums If you deposit $100 in an account earning 6% with monthly compounding, ho...

A: Present value (PV) = $100 Interest rate = 6% Monthly interest rate (r)= 6%/12 = 0.50% Period = 5 Yea...

Q: 1. You buy a call option on a stock for $7 with a strike price of $60. The stock currently sells for...

A: For calculating profit or loss on options, we have to compute selling price with strike price. Curre...

Q: Currently, ABS Company has an issues with the working capital. ABS is running the food manufacturing...

A: Days sales outstanding of a business organization ascertains the time period taken by a business org...

Q: tion of the financial system allows funds to flow from the surplus spending units to the deficit spe...

A: Step 1 One of the most significant components of contemporary civilization is the financial system.I...

Q: Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1,000 and ass...

A: Face value (F) = $1000 Annual coupon (C) = 5% of $1000 = $50 n = 5 years Let r = YTM

Question

E Activity # 3
Solve each word problem.
1. Mr. Rosales deposits P75,000 at the end of each month in a bank which pays 9% compounded monthly.
no withdrawals are made, how much could he expect to have after 4 years?
2. A certain fund currently has P100,000 and is invested at 3% interest compounded annually. How much
withdrawal can be made at the end of each year so that the fund will have zero balance at the end of
years?
3. What is the present value of an annuity of P150,000 payable at the end of each 6-month period for 2 yea
if money is worth 8% compounded semiannually?
4. ABC bank pays interest at the rate of 2% compounded quarterly. How much will Ken have in the bank at
the end of 5 years if he deposits P3,000 every month?
5. At the beginning of each quarter, P36,000 is deposited into savings account that pays 6% compounded
semiannually. Find the balance in the account at the end of three years.
yot oub yiunno

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Computation

VIEW

Conclusion

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Solve for the (1) in the blank Assume that you save 22,000USD to keep on the 1st day of every month under the systems, keeping in your home or monthly 7% simple interest in the bank. Put the balance at the beginning of n th month under the system. keeping in your home Mn and simple interest Sn Sn Then, the first chance when ≥ 2 is at the beginning of (1) th month. Mn Hint: Calculate the cases n = 1, 2, 3, ... to find the rule.
10. I have $72,000 in my bank account today. The bank manager told me that I will have $100,000 money in five years if I keep the money in this account and don’t touch it (meaning that I won’t withdraw from it or don’t add more into it). The account pays me daily interest. What is the APR for my account? (Show Work)
Q5: A full-time worker aged 25 invests $250 a month in a fund which has an average yearly return of 7.2% compounded monthly. (a) The worker wants to estimate what they will have for retirement when they are 60 years old if the rate stays constant. Assume monthly compounding. (b) If the worker makes no further deposits and makes no withdrawals after age 60, how much will they have for retirement at age 69?
Marcus is trying to decide which checking account to open. Bank A's account pays 1.6%, compounded annually. Bank Q's account pays 0.4% compounded quarterly. Which account will produce the highest return? Question 14 options: Bank A Bank Q They are the Same
Q2.3: Abigail set up a savings fund for his son's education so that he would be able to withdraw $1,775 at the beginning of every month for the next 6 years. The fund earns 5.16% compounded quarterly. a. What amount should he deposit today to allow for the $1,775 periodic withdrawals? b. How much interest would he earn in this investment? Kindly keep all the decimals for all the preocedures, DO NOT ROUND
Question 1. Suppose that you invest P dollars at the beginning of every week. However, your crazy banker decides to compound interest at a rate r at the end of Week 5, Week 9, Week 12, Week 14, and Week 15. What is the value of the account at the end of Week 15? At the end of the Week 15, you need to spend $15, 000 on a bandersnatch. How much money must you invest weekly to ensure you have exactly $15, 000 after Week 15 if the weekly interest rate is 10%?
Grandpa puts $50,000 into a bank account for you earning 3% compounded monthly. How much will you have in the account after 5 years if you don't make Grandpa mad enough to take the money back before then? Select an answer and submit. For keybard navigation, use the up/down arrow keys to select an answer. a b $57,963.70 $58,659.93 C $58,080.841 d $62,567.12
Start your trial now! First week only $4.99!arrow_forward Question Read and analyze each given scenario and provide what is asked. Show your complete solutions. 1. It is now January 1, 20x8. Today you will deposit P100,000 into a savings account that pays 8%. a. If the bank compounds interest annually, how much will you have in your account on January 1, 20x9? b. What will your January 1, 20x9 balance be if the bank uses quarterly compounding? 2. It is now January 1, 2x16, and you will need P100,000 on January 1, 2x20. Your bank compounds interest at an 8% annual rate. How much must you deposit today to have a balance of P100,000 on January 1, 2x20? 3. If you deposited P200,000 in a bank account that pays 6% interest annually, how much will be in your account after five (5) years? 4. What is the present value of a security that will pay P290,000 in 20 years if securities of equal risk pay 5% annually? 5. What is the future value of a 5%, 5-year ordinary annuity that…
4. How much should you deposit in an account so that you can withdraw $5300 every year for the next 18 years. Interest rate is 6%. Please do not use excel. Also, include cashflow diagram if possible.
Suppose you want to withdraw $20,000 at the end of year 3 and another $20,000 at the end of year 5. The account's interest rate is 5% compounded annually. A How much should you deposit now? B) Suppose you realize you can only deposit $10,000 today, but you expect to have more funds available in 1 year. How much must you deposit into the account at the end of year 1 so that you can still make the necessary withdrawals at the end of years 3 and 5?
Suppose you have $1,000,000 in savings account when you retire. Your plan is to withdraw $6,000 a month as retirement income from this account. You expect to earn annual interest of 5%, compounded monthly, on your money during your retirement. How many months can you be retired until you run out of money? A-210.83 B-262.59 C-220.27 D-285.14
Your aunt has $270,000 invested at 5.5%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $50,000 left in the end? a. 8.30 b. 7.98 c. 8.94 d. 8.06 e. 9.19