Question

In: Finance

you are saving a 183000$ house. there are two competing banks in your area.both offering certificates...

you are saving a 183000$ house. there are two competing banks in your area.both offering certificates of deposit yielding 6.8%.
how long will it take to your initial 100000$ investment to reach the desired level at 2nd bank.which compounds interest monthly

Solutions

Expert Solution

Given Facts & Data:

Initial Investment i.e Present Value of Investment (PV) = $ 100,000

Rate of Interest (R) = 6.8 % *

Future Value (FV) = $ 183,000

(*with no additional information, it is assumed to be annual rate of interest)

To calculate the Number of months/periods ie. "n" to achieve the desired FV.

We know that, when interest is compounded monthly,

(using calculator)

ie. 107 periods OR 107 months

Therefore, It will take 8 years and 11 months for the initial investment to reach the desired level at the 2nd Bank.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

TVM: 1. You are interested in saving money for your first house. Your plan is to...
TVM: 1. You are interested in saving money for your first house. Your plan is to make regular deposits into a brokerage account that will earn 14 percent. Your first deposit of $5,000 will be made today. You also plan to make four additional deposits at the beginning of each of the next four years. Your plan is to increase your deposits by 10 percent a year. (That is, you plan to deposit $5,500 at t = 1, and $6,050...
You are saving for the down payment on a house. The houses in the area you...
You are saving for the down payment on a house. The houses in the area you prefer have an average selling price of $450,000 and you need a 10% down payment to ensure your mortgage payments are not too high. You have $30,000 saved that you can invest today at 6.5% (annual compounding). a) How long before you will have enough for the down payment saved? b) You want to buy the house sooner. In addition to the $30,000 saved...
Suppose you paint your house this year, using $200 of paint bought this year and saving...
Suppose you paint your house this year, using $200 of paint bought this year and saving $900 in labor that would have been paid to a painting company. How much does GDP increase this year? a. $900, since paint is considered a durable good. b. $200. c. 1,100, since your labor value is imputed. d. $0, since this is do-it-yourself activity.
You are saving for the college education of your two children. They are two years apart...
You are saving for the college education of your two children. They are two years apart in age; one will begin college in 7 years, and another in 10 years. You estimate your first child’s college expenses to be $30,000 per year, paid at the beginning of each college year (first payment is at year 7 and so on). You estimate your second child’s college expenses to be $50,000 per year, paid at the beginning of each college year (first...
You are saving for the college education of your two children. They are two years apart...
You are saving for the college education of your two children. They are two years apart in age: one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be 21,000$ per year per child, payable at the beginning of each school year. It takes four years to graduate. The annual interest is 15%. How much money must you deposit in an account each year to fund...
You are saving for the college eduction of your two children. They are two years apart...
You are saving for the college eduction of your two children. They are two years apart in age; one will begin college 17 years from today and other child will begin in 19 years from today. You estimate the college expenses to be $40000 per year per child. Given r = 8% EAR. College expenses are paid at the beginning of each school year. How much money must you deposit in an account each year to fund your children's education?...
You are saving for the college education of your two children. They are two years apart...
You are saving for the college education of your two children. They are two years apart in age; one will begin college 14 years from today and the other will begin 16 years from today. You estimate your children’s college expenses to be $38,000 per year per child, payable at the beginning of each school year. The appropriate interest rate is 6.8 percent. Your deposits begin one year from today. You will make your last deposit when your oldest child...
There are two suppliers of aluminum extrusions competing for your business. You are motivated to have...
There are two suppliers of aluminum extrusions competing for your business. You are motivated to have extrusions with good (i.e. high) yield strength and low variance. Each supplier provides you the following yield strength data (in ksi) from their respective processes: X1= {76.5, 77.1, 76.1, 76.2, 75.9, 76.8, 77.0, 75.8, 76.6, 76.7} X2= {78.2, 77.9, 77.2, 77.6, 76.2, 77.5, 77.2, 76.3, 77.3, 77.8} At α = 0.05, whom will you choose? Statistically justify your answer. Please solve by hand instead...
6. You are saving for a new house and you put $25,000 per year in an...
6. You are saving for a new house and you put $25,000 per year in an account paying 4.5%. The first payment is made today. A.) How much will you have at the end of 3 years? (Show Work) B. Also build a table/schedule to show your account each year (include beginning balance and ending balance each year, interest earned).
You are saving for a new house and you put $20,000 per year in an account...
You are saving for a new house and you put $20,000 per year in an account paying 8%. The first payment is made today. How much will you have at the end of 3 years? A. $51,541.19 B. $55,665.29 C. $64,928.00 D. $70,122.24 E. $75,732.19
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT