Question

In: Finance

You are going to deposit certain amount in the next four years. Your saving account offers...

  1. You are going to deposit certain amount in the next four years. Your saving account offers 10% of annual interest rate.

First year:         $500

Second year:     $600

Third year:        $700

Fourth year:      $800.

How much is the lump sum value as of today (NPV)?

  1. 2304.81
  2. 2022.74
  3. 1900.00
  4. 2913.52

Solutions

Expert Solution

Ans B. 2022.74

The lump sum value as of today (NPV) is 2022.74

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You are going to deposit certain amount in the next four years. Your saving account offers...
You are going to deposit certain amount in the next four years. Your saving account offers 10% of annual interest rate. First year:         $500 Second year:     $600 Third year:        $700 Fourth year:      $800. How much you can withdraw four years later? 2403.17 3185.05 2961.50 3319.25
Bank offers following type of saving accounts requiring initial deposit of PLN 1,000,000: * account A...
Bank offers following type of saving accounts requiring initial deposit of PLN 1,000,000: * account A - compunding interest account offering 8% pa under quarterly compunding (incl. interest accrued quarterly) opened for 3 years, * account B - simple interest account opened for 3 years. What should be the rate offered for account B so that it would give the same amount of total interest (income) after saving account is closed?
Suppose that you put $5,000 in your saving account and your bank offers an interest rate...
Suppose that you put $5,000 in your saving account and your bank offers an interest rate of 5% p.a. What will be the compounded amount in five years and the corresponding annual effective rate (AER)? a) If it was compounded quarterly? b) If it was compounded monthly? c) If it was compounded fortnightly? d) If it was compounded weekly? e) If it was compounded daily?
Question 5. (16) How much do you have to deposit in your saving account if you...
Question 5. (16) How much do you have to deposit in your saving account if you wish to have RM40,000 in 5 years given the annual interest rate is 3% compounded monthly?                                           (2) You want to take a mortgage of RM400,000 for a new house. The mortgage is financed at 6% per annum adjusted monthly over 20 years. What is the monthly repayment on the mortgage?                                 (2) What is the total amount paid over 20 years?                                        (2)...
You deposit $1,000 in a saving account at 10% compounded annually. How much is your first...
You deposit $1,000 in a saving account at 10% compounded annually. How much is your first year interest? How much is your second year interest? 100, 100 100, 110 100, 120 100, 150
You deposit $500 at the beginning of each month into your saving account every month. After...
You deposit $500 at the beginning of each month into your saving account every month. After five years (60 deposits total), your account value is $50,000. Assuming monthly compounding, what is your monthly rate that the bank provides? a.   1.22% b.   1.14 c.    1.43% d.   1.57%
Your investment account is expected to earn a 5% return for next two years and then 8% return for next four years after that.
a. Your investment account is expected to earn a 5% return for next two years and then 8% return for next four years after that. You need to withdraw $750 from this account at the end of each month for next six years. After last withdrawal at end of six years, nothing remains in your account. how much is deposited in this account today? (Assume monthly compounding)b. You just bought a condo for $250,000 and paid $50,000 as down payment....
You plan to make a deposit every year into your retirement account for 30 years. Your...
You plan to make a deposit every year into your retirement account for 30 years. Your deposit at the end of the first year will be $2000. Each year you will increase your deposit by $500. What would be the equivalent amount that you would need to deposit each year if the amount you deposited every year never changed. (i.e. instead of your first deposit being $2000 and your second being $2500, etc., your first deposit will be $X and...
Suppose you deposit $12,000 in an account that offers 1.7% annual interest, as long as you...
Suppose you deposit $12,000 in an account that offers 1.7% annual interest, as long as you leave the principal untouched for 5 years. (a) If interest is compounded quarterly, what would the account be worth after 5 years? FORMULA: SOLUTION: (b) If interest is compounded continuously, what would the account be worth after 5 years? FORMULA: SOLUTION: (c) Is the effective interest rate for either scenario greater or less than 1.7%? Explain your answer. 5. (a) (4 points) Nick has...
Anton will deposit $1,000 into a savings account at the beginning of each month for the next 10 years.
Anton will deposit $1,000 into a savings account at the beginning of each month for the next 10 years. In return, he receives a payment of X at the end of each year forever, beginning at the end of the 11th year. Assuming an annual effective rate of discount of 5% for both accounts, determine X.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT