Plz using Mathematical Fomulars to sovle questions as followed: You would like to have $75,000 in...

Plz using Mathematical Fomulars to sovle questions as followed:

a. How much must you deposit annually to accumulate this amount?

b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be? (Assume you can earn 8 percent on this deposit.)

c. At the end of five years, you will receive $20,000 and deposit it in the bank in an effort to reach your goal of $75,000 at the end of 15 years. In addition to the deposit, how large must your equal annual deposits for all 15 years be to reach your goal? (Again, assume you can earn 8 percent on this deposit.)

Solutions

Expert Solution

a. How much must you deposit annually to accumulate this amount?

We are given the following information:

Annual payment	PMT	To be calculated
rate of interest	r	8.00%
number of years	n	15
Required future value	FV	$ 75,000.00

We need to solve the following equation to arrive at the required PMT

So the annual payment required is 2762.22

b. We are given the following information:

Lump sum need to be deposited now	PV	To be calculated
rate of interest	r	8.00%
number of years	n	15
Required future value	FV	$ 75,000.00

We need to solve the following equation to arrive at the required PV

So the lump sum required right now is23643.13

c. As there will be a deposit of 20000 at the end of 5 years the we need to compound it for 10 years, subtract its FV from the 75000 and then we need to find the annual payment for the balance FV.

We are given the following information

Lump sum need to be deposited now	PV	20000
rate of interest	r	8.00%
number of years	n	10
future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the deposit of 20000 will become 43178.50 and so the required amount from annual payments is 75000-43178.50 = $31,821.50

Now this is the required FV so accordingly we need to calculate the annual payment.

We are given the following information

Annual payment	PMT	To be calculated
rate of interest	r	8.00%
number of years	n	15
Required future value	FV	$ 31,821.50

We need to solve the following equation to arrive at the required PMT

So the Annual payment required is 1171.97

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

You would like to have $75,000 in 15 years. To accumulate this amount, you plan to...

You would like to have $75,000 in 15 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 8 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be? ...

You have just interviewed for a job that you really would like to have. You have...

You have just interviewed for a job that you really would like to have. You have heard it is a good idea to follow up an interview with a thank-you note or letter and an indication of your enthusiasm for the position. Select the strategy you will use for your follow-up, and explain why you chose it and then write your THANK YOU

There are three numerical questions, you can answer them using either mathematical formula or financial calculator....

There are three numerical questions, you can answer them using either mathematical formula or financial calculator. No matter what method you use, you need to show the calculation steps (for math formula) or function buttons that you click. 1.a.) In the year-end of 2018, Mike Foods Inc. just spent $19.5 million to pay out the dividends and it disclosed the retained earnings of $279.5 million. In the year-end of 2017 the company had retained earnings of $221.8 million. Based on...

Describe which type of insurance you have or would like to have, and why.

a) You have $100,000 that you would like to invest. You have three investment choices: Savings...

a) You have $100,000 that you would like to invest. You have three investment choices: Savings Account A which earns 6% APR compounded annually, Savings Account B which earns 5.8% APR compounded monthly, or Savings Account C which earns 5.9% APR compounded quarterly. Which account should you choose? a) Savings Account A b) Savings Account B c) Savings Account C b)Which of the following is an example of the so called `agency problem' or `agency costs' in a large corporation: ...

You would like to buy a house that costs $ 350,000. You have $ 50,000 in...

You would like to buy a house that costs $ 350,000. You have $ 50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 7 % per year. You can afford to pay only $ 23,500 per year. The bank agrees to allow you to pay this amount each year,...

You would like to buy a house that costs $ 350,000. You have $ 50,000 in...

You would like to buy a house that costs $ 350,000. You have $ 50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7 % per year. You can afford to pay only $ 22,970 per year. The bank agrees to allow you to pay this amount each year, yet...

You have to decide on a product/service you would like to provide. State it at the...

You have to decide on a product/service you would like to provide. State it at the beginning of your essay. Go through the Appreciative Inquiry process and write up mission, vision, and values statement for this new company. Imagine you are a strategic leader who has to develop a mission, vision, and values statement of a NEW (imaginary) company. You will have to decide on a product or service that this new company would like to offer and clearly state...

You would like to buy a house that costs $ 350,000 . You have $ 50,000...

You would like to buy a house that costs $ 350,000 . You have $ 50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7 % per year. You can afford to pay only $ 23,500 per year. The bank agrees to allow you to pay this amount each year,...

You would like to buy a house that costs $ 350,000. You have $ 50,000 in...

You would like to buy a house that costs $ 350,000. You have $ 50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is offering you a 30-year mortgage that requires annual payments and has an interest rate of 8 % per year. You can afford to pay only $ 25,580 per year. The bank agrees to allow you to pay this amount each year,...

Subjects