Question

In: Finance

Signs (PV) 1. You want to have this amount at the end 913 Your money will...

Signs (PV)
1. You want to have this amount at the end 913
Your money will be invested this number of years 14
You will invest this amount each year 29
The rate you will earn each year is this 4.6%
How much should you start your investment with, today?
A Between 50.00 and 200.00
B Between 200.00 and 250.00
C Between 250.00 and 300.00
D Between 300.00 and 500.00

Solutions

Expert Solution

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=29[(1.046)^14-1]/0.046

=29*19.0632736

=552.834934

We use the formula:  
A=P(1+r/100)^n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

Hence A=deposit at beginning*(1.046)^14

Required future value=Future value of annuity+Deposit at beginning*(1.046)^14

913=552.834934+Deposit at beginning*(1.046)^14

Deposit at beginning=(913-552.834934)/(1.046)^14

=$191.89(Approx)

Hence the correct option is:

Between 50.00 and 200.00


Related Solutions

Time value of money: 1 point You want to have an amount of $30,000 in five...
Time value of money: 1 point You want to have an amount of $30,000 in five years. Calculate the amount you need to save each year in the next five years so you can achieve this goal. Assume that the interest rate is 6%, that interest is compounded annually, and that you put money into your saving account at the beginning of each year.   Bond valuation: 2 points XYZ Corporation has an outstanding 20-year bond with a $10,000 face value...
Your grandparents have been left a substantial amount of money and want to invest in a...
Your grandparents have been left a substantial amount of money and want to invest in a company. Your grandfather trusts you to make a recommendation, but he also wants to see the reasoning behind your choice. You have an idea of which company to choose and you decide to prepare 3 sets of documents for your grandparents to consider: business analysis, combined income and cash flow statement, and trend analysis. Business Analysis Select a public company that trades on either...
You want to set aside some money for your friend Pip. (a) You have great expectations...
You want to set aside some money for your friend Pip. (a) You have great expectations for Pip and want to give him $250,000 a year for 20 years. If you’re able to lock in an effective annual nominal interest rate of 8%, how much do you need to put down today if you want the payments to begin next year? (b) Before signing the documents to set up Pip’s trust, you decide that you’re feeling even more generous. How...
You want to evaluate your savings of 2.500.000 $. If you deposit your money in the...
You want to evaluate your savings of 2.500.000 $. If you deposit your money in the A bank, you get 9% interest income in every three years. The B bank provides 4% interest income per year. The B bank also provides 6% annual income to the 4-year private account and 6% annual income to the 7-year private account. Also, if you invest your money in a 4-year government bond, 7.5% interest income per year. However, the government deducts 15% tax...
You want to start saving money for your retirement. You want toretire in 35 years...
You want to start saving money for your retirement. You want to retire in 35 years and think you will need to accumulate $1,500,000 to maintain your desired lifestyle after you retire. If you are confident you will be generating 6% annual rate of return, how much do you have to save each month?Group of answer choices$1,121.73$712.74$1,052.85$8,552.85
Do you end up paying the same amount of money for a bond issued at a...
Do you end up paying the same amount of money for a bond issued at a discount or a bond issued at a premium ?
You want to evaluate your savings of 1.000.000 TL. If you deposit your money in the...
You want to evaluate your savings of 1.000.000 TL. If you deposit your money in the bank, you get 10% interest income in every two years. The Bank also provides 7% annual income to the 4-year private account and 9% annual income to the 6-year private account. Also, if you invest your money in a 6-year government bond, 7.5% per year; if you invest in a 8-year municipal bond, you can get 9.5% interest income per year. However, the government...
You want to buy a boat that costs today $40,000. Your plan is to save monthly amount so that you will have enough money to purchase the boat three years from now.
You want to buy a boat that costs today $40,000. Your plan is to save monthly amount so that you will have enough money to purchase the boat three years from now. The rate of inflation of boats is expected to be 3% per year for the near future, and your bank pays an interest rate of 3% per year compounded monthly. How much money you should save every month to buy the boat three years from now?
It is your 25th birthday (end of 25 years) and you decide that you want to...
It is your 25th birthday (end of 25 years) and you decide that you want to retire on your 65th birthday (end of 65 years - 40 years later). Your salary is $55,000 per year and you expect your salary to increase by 3% each year for the next 40 years. When you retire, you want your retirement fund to provide an annual payment equal to 80% of your salary at age 65 and to increase by 2% a year...
1. When you list your references at the end of your work, you should: a) have...
1. When you list your references at the end of your work, you should: a) have separate lists for journals, books, websites b) have one long list arranged alphabetically by author, and thereafter chronologically, starting with the earliest date c) have one long list for all your references arranged alphabetically by author 2. Is this a correct in-text citation? True or False? Thwaites (2007, p. 151) argued that ‘Psychoanalysis is…..’ . Look at this reference. Is this a complete book...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT