s to borrow money from you. He states that he will pay you $3,900 every 6 months for 7 years with the oday. The interest rate is 6.2 percent compounded semiannually. What is the value of the payments to Choice $35,805.70 $28,718.70 $29,488.70
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- Assume that you inherited some money. A friend of yours is working as an unpaid intern at a local brokerage firm, and her boss is selling securities that call for 4 payments of 50 (1 payment at the end of each of the next 4 years) plus an extra payment of 1,000 at the end of Year 4. Your friend says she can get you some of these securities at a cost of 900 each. Your money is now invested in a bank that pays an 8% nominal (quoted) interest rate but with quarterly compounding. You regard the securities as being just as safe, and as liquid, as your bank deposit, so your required effective annual rate of return on the securities is the same as that on your bank deposit. You must calculate the value of the securities to decide whether they are a good investment. What is their present value to you?Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
- Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?Samuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.A friend who owns a perpetuity that promises to pay $1,000 at the end of each year, forever, comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,001. At an interest rate of 10%, should you pay the $1,000 today to receive payment numbers 26 and onwards? What does this suggest to you about the value of perpetual payments?
- You need to have $20,000 for a down payment on a house 4 in years. If you can earn an annual interest rate of 3.8 percent, how much will you have to deposit today? Multiple Choice $16,597.52 $15,404.53 $17,228.23 $16,707.18 $16,900.24You want to have $46,000 in your savings account 6 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 7.7 percent Interest, what amount must you deposit each year? Multiple Choice O O $3,542.02 $3,541.98 $7,666.67 $6.318.12 $9,797.42Your brother-in-law asks you to lend him $225000.00 as a second mortgage on his vacation home. He promises to make level monthly payments for 10 years, 120 payments in all. You decide that a fair interest rate is 4.50% compounded annually. What should the monthly payment be on the $225000.00 loan? O $2369.60 $2331.86 $1875.00 O $2272.31 O $1959.37
- You want to buy a car and therefore you borrowed $10,000 from a bank today for 6 years. The nominal interest rate that the bank charges is 7.2%. If you intend to make equal end-of-month payments and then make an additional final payment of $1,000 at the end of the last month then what will be your approximate monthly installment? Group of answer choices $170.43 $175.45 $154.31 $160.31You have received a settlement from an insurance company which will pay you $100,000 per year for 12 years at the end of each year and J.G. Wentworth wants to buy your annuity. What is JG Wentworth’s annual rate of return (interest rate) if they are willing to pay you $500,000 today? 7.56% 18.21% 16.94% Interest rate cannot be calculated.You want to have $67,000 in your savings account 10 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 6.3 percent interest, what amount must you deposit each year? Group of answer choices $6,700.00 $5,011.98 $4,221.01 $4,220.99 $9,350.13