2- A man wants to reach S 10000 money seven years from now in his bank account. He plans to make equal end of year payments during seven years. Fortunately, his sister offers to give him S 1000 at the beginning of the first year. Thus, he accepts her offer and how much money is his annual equal payment? (Assume annual interest rate of 5%).

2- A man wants to reach S 10000 money seven years from now in his bank account. He plans to make equal end of year payments during seven years. Fortunately, his sister offers to give him S 1000 at the beginning of the first year. Thus, he accepts her offer and how much money is his annual equal payment? (Assume annual interest rate of 5%).

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 16PROB

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Similar questions

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
2. 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 the25th year for a price of $1,000. At an interest rate of 10%, should you pay the $1,000today to receive payment numbers 26 and onwards? What does this suggest to youabout the value of perpetual payments?
Holly Krech is planning for her retirement, so she is setting up a payout annuity with her bank. She wishes to receive a payout of $1,900 per month for twenty years. (a) How much money must she deposit if her money earns 7.8% interest compounded monthly? (Round your answer to the nearest cent.)___________ $ (b) Find the total amount that Holly will receive from her payout annuity. Thank you!
2. A friend who owns a perpetuity that promises to pay $2,000 at the end of each year, forever, comes to you and offers to give you the payments to be received from the 10th year through 30th year. How much would you pay for it when the interest rate is 10%?
A newly wedded couple is planning to buy a two bedroom apartment in Windhoek for N$280000. He is expected to pay a 10% deposit and they can secure a bond from a local bank repayable over 24 years at 9% p.a. interest. (a) What is the total amount of money expected to be paid to the bank over the years? N$ (b) (i) What will be the couples monthly installment? N$ (ii) Calculate the monthly interest amount they will have to pay? N$ (iii) What is the monthly principal amount to be paid? (iv) what is the total interest amount to be paid at the end of the bond period?
PART B.) George is loaned $100,000 in Year 0. Approximately (round up to the nearest year) many years will it take him to pay off the loan at 4% interest if he pays down the loan by $10,000 in Year 1 and increases his payment by $1,000 in each year starting in Year 2?
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?
6) A couple will need $50, 000 for a down payment on a home in eleven years. They plan to invest $8,000 up front and make a payment at the end of each month for the full eleven years. Assume the account earns 6.89% monthly. (a) How much will the initial deposit be worth in ten years? Round to two decimal places. (b) How much should the monthly payment be? Round to two decimal places.
6. If you desire to have $80,000 for a down payment for a house in 7 years, what amount would you need to deposit each year for these 7 years? Assume that your money will earn 10 percent per year. 7. Kate deposits $9,900 each yearinto her retirement account. If these funds have an average earning of 11 percent over the 40 years until her retirement, what will be the value of her retirement account?
Slick Sam has a special relationship with his banker. The nature of the relationship is as follows: • The bank owes Sam $100 per year forever. The 1st payment is due in 1 year. • The bank will borrow or lend money to Sam at a constant effective rate of i per year. Today, Sam calculated the present value of the payments that are due to him as X. Sam can receive his first 16 payments at the end of year 16 in a lump sum. If he does that, then the total value of the lump sum and future payments at the end of the sixteenth year is X + 2,000. Calculate X. A B с D E 3,330 3,350 3,400 3,450 3,500
6. Mahmoud has to pay three equal payments of $50,000 for a house he is buying, The payments are at the end of year five, 10 and 15, respectively. If the interest rate is 14% how much would he take as a loan to pay for the house? b. а. If Mahmoud decides to pay the remaining balance after paying the second installment in year 10 immediately, how much would he pay at the end of year 10 as repayment for the unpaid balance?
3. Mr. Rodriguez invests $2,000 in a savings plan. The savings account pays an annual interest rate of 5.75% on the amount he put in at the end of each year. a. How much will r. Rodriguez eam if he leaves his money in the savings plan for 10 years? b. How much money will be in his savings plan at the end of 10 years?