Suppose an investor plans to make monthly deposits into an account that pays 9% interest, compounded...

Suppose an investor plans to make monthly deposits into an account that pays 9% interest, compounded monthly, so that $100,000 will be in the account immediately after the payment at the end of Year 10. The first payment will occur at the end of Month 1 (one month from the present). How much must be deposited monthly?

A.
$517 per month

B.
$9,670 per month

C.
$6,580 per month

D.
$9,67 per month

Expert Solution

The monthly deposits would be:-

A = F*(A/F,I,N)

I = 9/12 = 0.75

N = 10*12 = 120

= 100000*(A/F,0.75,120)

= 100000*0.005168

= 517 Per month

option(A)

Rahul Sunny answered 2 years ago

You are planning to make monthly deposits of $120 into a retirement account that pays 9...

You are planning to make monthly deposits of $120 into a retirement account that pays 9 percent annual interest (APR), compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 19 years? rev: 09_17_2012 Multiple Choice $71,900.73 $75,495.77 $66,266.58 $68,305.69 $862,808.76

You can afford monthly deposits of $130 into an account that pays 3.0% compounded monthly. How...

You can afford monthly deposits of $130 into an account that pays 3.0% compounded monthly. How long (in months) will it be until you have $11,400 to buy a boat?

ou have an account that pays 3% annual interest compounded monthly. You make an initial deposit,...

ou have an account that pays 3% annual interest compounded monthly. You make an initial deposit, and then withdraw $170 at the end of each month for 6 years. At that time you make a second deposit of $9000, and then withdraw $250 at the end of each month for the following 8 years, ending with a zero balance. What is your initial deposit?

You are planning to make monthly deposits of $170 into a retirement account that pays 8...

You are planning to make monthly deposits of $170 into a retirement account that pays 8 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 21 years?

You are planning to make monthly deposits of $70 into a retirement account that pays 14...

You are planning to make monthly deposits of $70 into a retirement account that pays 14 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 22 years? $128,355.75, $1,466,922.82, $116,131.39, $122,243.57, $101,166.24

An individual initially deposits $4,000 into an account that pays interest at 8% per year compounded...

An individual initially deposits $4,000 into an account that pays interest at 8% per year compounded quarterly. A $200 deposit is made in the first month of the second year with deposits increasing by $40 per month until the end of the third year. Beginning in the first month of the fifth year, withdrawals of $100 per month are taken out of the account until the end of the fifth year. Compute the amount of money in the account to...

You put $5,000 into an account that pays 3% annual interest. Interest is compounded monthly. You...

You put $5,000 into an account that pays 3% annual interest. Interest is compounded monthly. You keep this money in the account for 10 years. How much money will you have? $750 $6,746 $5.750 $6,720 $8,144 Ali buys his wife a valuable piece of jewelry (diamond necklace) for $30,000. He purchases it using $25,000 from his savings account and a $5,000 loan. How does this purchase affect Ali's personal balance sheet? Choose the most correct answer. a. His assets increase....

Suppose your retirement account pays 9% APR compounded monthly. a. What size nest egg do we...

Suppose your retirement account pays 9% APR compounded monthly. a. What size nest egg do we need in order to retire with a 25 year annuity that yields $500 per month? b What size nest egg do we need in order to retire with a 25 year annuity that yields $700 per month? You estimate you can save $150 per month for a down payment on a car. You hope to purchase the car in 24 months. You invest this...

Effective versus nominal interest rates Bank A pays 9% interest compounded annually on deposits, while Bank...

Effective versus nominal interest rates Bank A pays 9% interest compounded annually on deposits, while Bank B pays 8.5% compounded daily. Based on the EAR (or EFF%), which bank should you use? You would choose Bank A because its EAR is higher. You would choose Bank B because its EAR is higher. You would choose Bank A because its nominal interest rate is higher. You would choose Bank B because its nominal interest rate is higher. You are indifferent between...

Bank A pays 15% interest, compounded monthly, on its money market account. What is the effective...

Bank A pays 15% interest, compounded monthly, on its money market account. What is the effective annual rate?

Question