Question

In: Finance

You have just deposited $8,500 into an account that promises to pay you an annual interest...

You have just deposited $8,500 into an account that promises to pay you an annual interest rate of 6 percent each year for the next 6 years. You will leave the money invested in the account and 10 years from today, you need to have $19,320 in the account. What annual interest rate must you earn over the last 4 years to accomplish this goal?

Multiple Choice

  • 14.07%

  • 11.37%

  • 10.01%

  • 12.51%

  • 11.55%

Solutions

Expert Solution

Value at the end of Year 6 is 8500*(1+0.06)^6 = 12057.41. Take this Value as Present Value for calculating rate.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You have just deposited $13,000 into an account that promises to pay you an annual interest...
You have just deposited $13,000 into an account that promises to pay you an annual interest rate of 6.9 percent each year for the next 5 years. You will leave the money invested in the account and 15 years from today, you need to have $43,590 in the account. What annual interest rate must you earn over the last 10 years to accomplish this goal?
Juliana just deposited $5,000 into an account at The Compound Bank. The bank will pay 4.5...
Juliana just deposited $5,000 into an account at The Compound Bank. The bank will pay 4.5 percent interest compounded annually on this money. How much interest on interest will Juliana earn over the next 10 years? The interest on interest earned is Blank 1 Use two decimals.
You just deposited $25,000 in a bank account that pays a 12.0% nominal interest rate, compounded...
You just deposited $25,000 in a bank account that pays a 12.0% nominal interest rate, compounded semi-annually. If you also add another $3,000 to the account each year over the next five years, how much will be in the account five years from now?
You just deposited $2,500 in a bank account that pays a 4.0% nominal interest rate, compounded...
You just deposited $2,500 in a bank account that pays a 4.0% nominal interest rate, compounded quarterly. If you also add another $5,000 to the account one year (4 quarters) from now and another $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now? Group of answer choices $18,563.53 $17,679.55 $16,035.88 $16,837.67 $15,234.08
You just deposited $3,500 in a bank account that pays a 4.0% nominal interest rate, compounded...
You just deposited $3,500 in a bank account that pays a 4.0% nominal interest rate, compounded quarterly. If you also add another $5,000 to the account one year (4 quarters) from now and another $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now?
Suppose Evan deposited $10,000 into a savings account today. The account pays a nominal annual interest...
Suppose Evan deposited $10,000 into a savings account today. The account pays a nominal annual interest rate of 12%, but interest is compounded quarterly. Assuming that he makes no additional deposits into or withdrawals from the account, what will his ending balance be 10 years from today?
$20, 000 is deposited into an account earning 2% effective annual interest. At the end of...
$20, 000 is deposited into an account earning 2% effective annual interest. At the end of each year, the interest earned in that year plus an additional $500 is withdrawn from this account and put into another account earning 5% effective annual interest. Find the accumulated value in the second account after 40 years (when the first account is completely depleted.)
$20, 000 is deposited into an account earning 2% effective annual interest. At the end of...
$20, 000 is deposited into an account earning 2% effective annual interest. At the end of each year, the interest earned in that year plus an additional $500 is withdrawn from this account and put into another account earning 5% effective annual interest. Find the accumulated value in the second account after 40 years (when the first account is completely depleted.)
(1) Suppose a company just paid a dividend of $3.6. Its manager promises to pay annual...
(1) Suppose a company just paid a dividend of $3.6. Its manager promises to pay annual dividend growing at 6% per year. If the required return is 12% (in EAR), what would the current price be? (2) Now assume the manager has decided to pay quarterly dividends instead of annual dividends. It has just paid a dividend of $0.9. The next dividend will be 3 months from now, with value equal to $0.9*1.061/4, and will grow at an annual rate...
(1) Suppose a company just paid a dividend of $3.6. Its manager promises to pay annual...
(1) Suppose a company just paid a dividend of $3.6. Its manager promises to pay annual dividend growing at 6% per year. If the required return is 12% (in EAR), what would the current price be? (2) Now assume the manager has decided to pay quarterly dividends instead of annual dividends. It has just paid a dividend of $0.9. The next dividend will be 3 months from now, with value equal to $0.9*(1.06)^1/4, and will grow at an annual rate...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT