Question

In: Finance

To save for a new car, Samuel Smith will invest $8,000 at the end of each...

To save for a new car, Samuel Smith will invest $8,000 at the end of each year for the next 5 years. The interest rate is 8%. What is the future value?

Multiple Choice

$40,000
$7,980
$46,936
$36,048

Expert Solution

Calculation of Future value.

Future Value = PV * (1+i)ⁿ

Here PV is the present value of the amount invested

i is rate of interest and n is the number of periods

End of Year 1 $8,000 (1+0.08)⁴

= $8,000 * 1.360

= $10,884

End of Year 2 $8,000 (1+0.08)³

= $8,000 * 1.259

= $10,077

End of Year 3 $8,000 (1+0.08)²

= $8,000 * 1.166

= $9,331

End of Year 4 $8,000 (1+0.08)¹

= $8,000 * 1.08

= $8,640

End of Year 5 $8,000

= $8,000

Total Future Value at the end of year 5 = $10,884 + $10,077 + $9,331 + $8,640 + $8,000

= $46,936 (approx).

Hence, the correct answer is $46,936

jeff jeffy answered 2 months ago

You want to buy a fancy car. For this goal, you plan to save $8,000 per...

You want to buy a fancy car. For this goal, you plan to save $8,000 per year, beginning immediately. You will make 5 deposits in an account that pays 8% interest. Under these assumptions, how much will you have 5 years from today? a. $51,402 b. $46,718 c. $47,635 d. $50,687

An investment promises to return $8,000 at the end of each of the next eight years...

An investment promises to return $8,000 at the end of each of the next eight years and then $3,000 at the end of each of the remaining seven years (years 9 through 15). What is the value of this investment today at a 9 percent interest rate?

In order to save for your retirement, you want to save $8,000 every year for 10...

In order to save for your retirement, you want to save $8,000 every year for 10 years, starting one year from now. The annual interest rate on your savings account is 7%. How much money will you have in your account in 10 years?

In December 2019, Dayanara bought a new BMW 328i car for $ 70,000 paying $ 8,000...

In December 2019, Dayanara bought a new BMW 328i car for $ 70,000 paying $ 8,000 suddenly. This agreed with Bank XYZ to pay the balance making equal annual payments in 6 years, at 9% interest. a. Determine the amount of the annual payment that will pay off the debt. b. Make the amortization table. Please show process.

Find the NPV -company considering new car that will cost 1m -it will save 275,000 a...

Find the NPV -company considering new car that will cost 1m -it will save 275,000 a year in costs -car will last for 5 yrs, depreciated at a CCA rate of 20%. -car salvage value is 50,000 at the end of yr 5 -no impact on net working capital -margin tax rate is 40%. -required return is 8% use formula or finance calculator to show work

Your new baby was born yesterday. To save for her education, you decide to invest in...

Your new baby was born yesterday. To save for her education, you decide to invest in a 529 plan and will make QUARTERLY contributions until your child enters the great UNLV when she turns 18. That is, you will save for the next 17 years (Or should it be 18 years? Think about it), and the contribution will be made at the END of each quarter. You expect that the 529 plan will return 8.5% per year with quarterly compounding....

You decide to save $1,000 at the end of each year for the next20 years....

You decide to save $1,000 at the end of each year for the next 20 years. If your savings earn an annual interest rate of 2%, how much will you have saved up by the end of 20 years? Round to the nearest cent.

Alex is riding in a car that has LEDs at each end. The car passes Jordan,...

Alex is riding in a car that has LEDs at each end. The car passes Jordan, who is standing on the ground 25 m from the car's path, with velocity 0.8c. Flashes from the two LEDs reach Jordan simultaneously, and when he observes them, he observes one to be 3.75 m to his left, and the other to be 3.75 m to his right. According to Alex, how far apart are the LEDs, and what was the delay between their...

Jack and Jill need to save $7000 toward a new car. How long will it take...

Jack and Jill need to save $7000 toward a new car. How long will it take them if they save $330 a month earning interest at 6.5% per year? (Treat as an ordinary annuity.) (State your answer in years rounded to the second decimal place, e.g., 12.34)

You decide to save $7,000 at the end of each year for the next 11 years....

You decide to save $7,000 at the end of each year for the next 11 years. If your savings earn an annual interest rate of 4%, how much will you have saved up by the end of 11 years? Round to the nearest cent.