You expect that you will need to replace your furnace in 4 yearsat a cost...

You expect that you will need to replace your furnace in 4 years at a cost of $15,777. How

much must you save today in an account that pays 3.5% APR (compounded monthly) to exactly pay the $15,777 in 4 years?

Solutions

Expert Solution

The amount is computed as follows:

Present value = Future value / (1 + r)ⁿ

So, the amount will be as follows:

= $ 15,777 / (1 + 0.035 / 12) ^{4 x 12} (Since the interest is compounded monthly, hence r is divided by 12 and n is multiplied by 12)

= $ 13,718.66 Approximately

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

You expect that you will need to replace your furnace in 4 yearsat a cost...

You expect that you will need to replace your furnace in 4 years at a cost of $15,067. Howmuch must you save today in an account that pays 3.18% APR (compounded monthly) to exactly pay the $15,067 in 4 years?

You expect that you will need to replace your furnace in 4 years at a cost...

You expect that you will need to replace your furnace in 4 years at a cost of $15,682. How much must you save today in an account that pays 3.58% APR (compounded monthly) to exactly pay the $15,682 in 4 years?

You expect that you will need to replace your furnace in 6 years at a cost...

You expect that you will need to replace your furnace in 6 years at a cost of $16,939. How much must you save, each month for 29 months, starting next month (the same amount each month) if your savings account pays 2.81% APR (compounded monthly)?

You expect that you will need to replace your furnace in 5 years at a cost...

You expect that you will need to replace your furnace in 5 years at a cost of $16,447. How much must you save, each month for 14 months, starting next month (the same amount each month) if your savings account pays 2.27% APR (compounded monthly)?

You expect that you will need to replace your furnace in 5 yearsat a cost...

You expect that you will need to replace your furnace in 5 years at a cost of $15,725. How much must you save, each month for 32 months, starting next month (the same amount each month) if your savings account pays 2.41% APR (compounded monthly)?

You expect that you will need to replace your furnace in 5 years at a cost...

You expect that you will need to replace your furnace in 5 years at a cost of $15,729. How much must you save today in an account that pays 3.42% APR (compounded monthly) to exactly pay the $15,729 in 5 years?

1.You expect Social Security will replace 30% of your income. Your average annual career income is...

1.You expect Social Security will replace 30% of your income. Your average annual career income is $60,000. Since you plan to travel more frequently throughout your retirement years, you think you will need an 85% wage replacement rate. What percent of your income will you be responsible to replace? A.30%. B.55%. C.85%. D.−15%. 2.Abha purchases an annual renewable term life insurance policy. Each year she renews her coverage, her premiums will? A.potentially increase, decrease, or remain the same depending on...

A new furnace for your small factory will cost $46,000 and a year to install, will...

A new furnace for your small factory will cost $46,000 and a year to install, will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,300 gallons per year. Heating oil this year will cost $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable...

A new furnace for your small factory will cost $43,000 and a year to install, will...

A new furnace for your small factory will cost $43,000 and a year to install, will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,000 gallons per year. Heating oil this year will cost $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable...

A new furnace for your small factory will cost $36,000 to install and will require ongoing...

A new furnace for your small factory will cost $36,000 to install and will require ongoing maintenance expenditures of $1,000 a year. But it is far more fuel efficient than your old furnace and will reduce your consumption of heating oil by 3,300 gallons per year. Heating oil this year will cost $2 a gallon; the price per gallon is expected to increase by $.50 a year for the next 3 years and then to stabilize for the foreseeable future....

Subjects