Question

In: Finance

After 10 years your business need Tk. 10,00,000. You maintain a sinking fund and deposit some...

  1. After 10 years your business need Tk. 10,00,000. You maintain a sinking fund and deposit some money at the beginning of each year for 10 years. If the interest rate is 5% then how much must the payment be to attain your requirements?
  2. Mr. Mannan borrow Tk. 5,00,000 from a bank for purchasing a shop. If he pays annual equal installments for 10 years at 8% interest rate on outstanding balance. Then what is the installment amount if he makes installment at the end of each year?
  3. If you receive Tk. 500 for each year until you died / forever. If the opportunity cost/discount rate is 6% then what is the value of this perpetual amount?
  4. What is the value of a bond paying 1000 per year for infinite time and the interest rate is 7%.

Solutions

Expert Solution

1. Use PMT function to find the yearly deposits made at the begining of the year

=PMT(rate,nper,pv,fv,type)

rate=5%

nper=10 years

pv=0

fv=1000000

type=1 (Because payments made at the begining of the years)

=PMT(5%,10,0,1000000,1)=$75,718.64

The deposits made at the begining of the year=$75,718.64

2. rate=8%

nper=10 years

pv=500000

fv=0

type=0 (Because payments made at the end of the years)

=PMT(8%,110,-500000,0,0)=$74,514.74

The payments made at the end of the year=$74,514.74

3. Value of perpetuial amount=annual payment/discount rate=500/6%=$8333.33

4. value of the bond=1000/7%=$14,285.71

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You deposit $13,000 annually into a life insurance fund for the next 10 years, after which...
You deposit $13,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate of 6 percent, what will be the amount in the retirement fund at the end of year 10? b. Instead of a lump sum, you wish to receive annuities for the next 20 years (years 11 through 30). What is the constant...
What is the monthly sinking fund payments required to accumulate $410,000 after 30 years given that...
What is the monthly sinking fund payments required to accumulate $410,000 after 30 years given that interest rate is 10.0%?
You deposit $10,000 annually into a life insurance fund for the next 12 years, after which...
You deposit $10,000 annually into a life insurance fund for the next 12 years, after which time you plan to retire. a. If the deposits are made at the beginning of the year and earn an interest rate of 8 percent, what will be the amount in the retirement fund at the end of year 12? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Future value $ ? b. Instead of a lump sum,...
You deposit $11,200 annually into a life insurance fund for the next 10 years, at which...
You deposit $11,200 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is the annual payment you expect to receive beginning in year 11 if you assume an interest rate of 6 percent for the whole time period? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Annuities per year...
You deposit $10,000 annually into a life insurance fund for the next 10 years, at which...
You deposit $10,000 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 25 years. What is the annual payment you expect to receive beginning in year 15 if you assume an interest rate of 4 percent for the whole time period? (Show you work and calculations)
You deposit $10,000 annually into a life insurance fund for the next 10 years, at which...
You deposit $10,000 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 25 years. What is the annual payment you expect to receive beginning in year 15 if you assume an interest rate of 4 percent for the whole time period?
You plan to retire after 30 years. After that, you need $200,000 per year for 10...
You plan to retire after 30 years. After that, you need $200,000 per year for 10 years (first withdrawal at t=31). At the end of these 10 years, you will enter a reitrement home where you will stay for the rest of your life. As soon as you enter the retirement home, you will need to make a single payment of $1,000,000. You want to start saving for your retirement in an account that pays you 9% p.a. Therefore, beginning...
You plan to deposit $4,500 per month in your kid’s college fund for 12 consecutive years....
You plan to deposit $4,500 per month in your kid’s college fund for 12 consecutive years. Assuming an annual rate of 6% how much should you expect to have on the account at the end of year 12?
ou deposit $10,900 annually into a life insurance fund for thenext 10 years, at which...
ou deposit $10,900 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is the annual payment you expect to receive beginning in year 11 if you assume an interest rate of 5 percent for the whole time period?
A corporation creates a sinking fund in order to have $920,000 to replace some machinery in...
A corporation creates a sinking fund in order to have $920,000 to replace some machinery in 12 years. How much should be placed in this account at the end of each quarter if the annual interest rate is 8.3% compounded quarterly? (Round your answers to the nearest cent.) $ How much interest would they earn over the life of the account? $ Determine the value of the fund after 2, 4, and 6 years. 2 years $ 4 years $...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT