QUESTION 10 Suppose you deposit $5,000 a year at the end of each year for 10 years. You earn 4.2% interest per year. What is the future value of this annuity? (What is the value at the end of 10 years?) O A. $39,444.02 O B. $47,658.92 OC. $58,626.06 O D. $60,590.25 QUESTION 11 Sammy decides to set up a retirement fund. He deposits $5,000 a year. He earns an annual interest rate of 4.5%. How much will Sammy have in his retirement fund in 30 years? O A. $305,035.35 OB. $335,350.93 OC. $402,550.34 O D. $464,629.31

QUESTION 10 Suppose you deposit $5,000 a year at the end of each year for 10 years. You earn 4.2% interest per year. What is the future value of this annuity? (What is the value at the end of 10 years?) O A. $39,444.02 O B. $47,658.92 OC. $58,626.06 O D. $60,590.25 QUESTION 11 Sammy decides to set up a retirement fund. He deposits $5,000 a year. He earns an annual interest rate of 4.5%. How much will Sammy have in his retirement fund in 30 years? O A. $305,035.35 OB. $335,350.93 OC. $402,550.34 O D. $464,629.31

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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QUESTION 5 Katharine Bartle will receive an annuity of $4,090.00 every month for 23 years. How much is this cash flow worth to them today if the payments begin today? Assume a discount rate of 5.00%. Oa. $55,398.13 b. $2,119,880.47 c. $672,837.73 Od. $170,156.69
QUESTION 9 Norbert Chapa is saving for retirement by putting away $6,090.00 every day for 6 years. How much is this investment worth at the end of 6 years if payments begin today" Assume an interest rate of 1.00%. Oa. $35,295.42 b. $12,945,053.24 Oc. $13,745,519.33 O d. $37,466.80
Question 11 You deposit $5000 each year into your retirement account, starting in one year. If these funds earn an average of 5% per year over the 27 years until your retirement, what will be the value of your retirement account upon retirement? Your Answer: Answer
QUESTION 7 You expect to receive $1,000 at the end of each of the next 3 years. You will deposit these payments into an account which pays 10 percent compounded annually. What is the future value of these payments, that is, the value at the end of the third year? O $3,000.00 O $3,310.00 O $3,318.01 O $3,400.96 16 O $3,438.27
Chapter 10 Discussion Q2 A perpetuity will pay $900 per year, starting five years after the perpetuity is purchased. What is the present value (PV) at time 0, given that the interest rate is 11%? Show your steps. A) $2695 B) $4312 C) $5390 D) $3234
QUESTION 2 A perpetuity-immediate pays 100 per year, Immediately after the fifth payment, the perpetuity is exchanged for a 25-year annuity-immediate that will pay X at the end of the first year. Each subsequent annual payment wili be 8% greater than the preceding payment.. The annual effective rate of interest is 8%. Calculate X. a. 74 Ob.64 C 84 6d. 94 Se. 54
QUESTION 4 For the next 13 years, you will deposit $2,250 every quarter in a savings account. The account pays 3,75% interest compounded quarterly. What is the future value of this series? a. 93,585.77 O b. 149,891.29 O c. 72796.45 O d. 436,228.07
QUESTION 8 Keira wants to invest $4,300 in an account with an interest rate of 7.2% that is compounded MONTHLY. Which of the following choices will correctly calculate the amount of money in Keira's account after 9 years? 9 O A. Amount = 4300x 7.2xe B. Amount = 0.072x9xe4300 C. 12x9 7.2 Amount = 4300 1+ ) 12 O D. Amount = 4300e0.072 x 9 12 x9 O E. Amount = 4300 1+ 0.072 12 O F. Amount = 4300e7.2x 9
A Question 11 You deposit $5000 each year into your retirement account, starting in one year. If these funds earn an average of 5% per year over the 27 years until your retirement, what will be the value of your retirement account upon retirement? Your Answer: Answer Hide hint for Question 11 NOTICE THAT THE ONLINE FINANCIAL CALCULATOR HAS THE BUTTON FOR PAYMENTS MADE AT THE END OF THE PERIOD. THIS IS THE DEFAULT OF THE CALCULATOR, AND THE WORDS 'STARTING IN ONE YEAR' ARE JUST CONFIRMATION THAT YOU WANT THAT END OF THE PERIOD BUTTON SELECTED.
7How much more is a perpetuity paying $5000 at the end of year worth than an annuity paying the same annual amounts at the end of each year for 30 years? Assume an interest rate of 5%. a. $10,635.08 b. $21,976.29 c. $50,000.00 d. $23,137.74 8Miller's Hardware plans on saving $40,000, $50,000, and $58,000 at the end of each year for the next three years, respectively. How much will the firm have saved at the end of the three years if it can earn 6% by reinvesting its saving? a. $155,944.00 b. $169,004.13 c. $148,000.00 d. $148,078.15 9On the day you retire you have $500,000 saved. You expect to live another 30 years during which time you expect to earn 8% on your savings while inflation averages 3.5% annually. Assume you want to spend the same amount each year in real terms and die on the day you spend your last dime. What real amount will you be able to spend each year?  a. $61,931.78 b. $79,211.09 c. $79,644.58 d. $30,695.77
1On the day you retire you have $500,000 saved. You expect to live another 30 years during which time you expect to earn 8% on your savings while inflation averages 3.5% annually. Assume you want to spend the same amount each year in real terms and die on the day you spend your last dime. What real amount will you be able to spend each year?  a. $61,931.78 b. $79,211.09 c. $79,644.58 d. $30,695.77 2Now consider your financial objective is to save $500,000 for preparing your retirement, assuming 30 years from now. If you invest your RRSP savings in a mutual fund which can realize an average return of 10% per year. To achieve your goal, how much do you need to save at the end of each year over the 30-year period? a. 4,039.26 b. 3,039.62 c. 2,985.54 d. 10,988.32 3What is the FV of $100 deposited today into an account with an APR 12.6%, compounded semiannually for 10 years? a. 1478.96 b. 3460.06 c. 327.63 d. 339.36
Question 7 You want to have GH¢ 50,000 in your savings account five years from now, and you’re prepared to make equal annual deposits into the account at the end of each year. If the account pays 9.5 percent interest, what amount must you deposit each year?

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