User Account

All Pages

Calculate the amount of money that will accumulate

Assignment Help Finance Basics
Reference no: EM132355791

1. Leslie? Mosallam, who recently sold her? Porsche, placed ?$10 comma 000 in a savings account paying annual compound interest of 5 percent.

a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3?, 7?, and 17 ?year(s).

b. Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9 percent. Rework part ?(a?) using 7 percent and 9 percent.

c. What conclusions can you draw about the relationship between interest? rates, time, and future sums from the calculations you just? did?

2. You are hoping to buy a house in the future and recently received an inheritance of ?$22 comma 000. You intend to use your inheritance as a down payment on your house.

a. If you put your inheritance in an account that earns 9 percent interest compounded? annually, how many years will it be before your inheritance grows to ?$32 comma 000??

b. If you let your money grow for 10.5 years at 9 percent?, how much will you? have?

c. How long will it take your money to grow to ?$32 comma 000 if you move it into an account that pays 3 percent compounded? annually? How long will it take your money to grow to ?$32 comma 000 if you move it into an account that pays 11 percent??

d. What does all this tell you about the relationship among interest? rates, time, and future? sums?

3. You just received a bonus of ?$3000.

a. Calculate the future value of ?$3000?, given that it will be held in the bank for 6 years and earn an annual interest rate of 6 percent

b. Recalculate part ?(a?) using a compounding period that is? (1) semiannual and? (2) bimonthly.

c. Recalculate parts ?(a?) and ?(b?) using an annual interest rate of 12 percent.

d. Recalculate part ?(a?) using a time horizon of 12 years at an annual interest rate of 6 percent. e. What conclusions can you draw when you compare the answers in parts ?(c?) and ?(d?) with the answers in parts ?(a?) and ?(b?)?

4. If you deposit ?$3 comma 100 today into an account earning an annual rate of return of 6 ?percent, what would your account be worth in 35 years? (assuming no further? deposits)? In 40 ?years?

5. Sarah Wiggum would like to make a single investment and have ?$1.6 million at the time of her retirement in 26 years. She has found a mutual fund that will earn 5 percent annually. How much will Sarah have to invest? today? If Sarah earned an annual return of 17 ?percent, how soon could she then? retire?

a. If Sarah can earn 5 percent annually for the next 26 years, the amount of money she will have to invest today is ?

Reference no: EM132355791

Questions Cloud

We have personal expenses along with micro expenses : We have personal expenses along with micro expenses. People don't realize that micro expenses so add up if you look at it on weekly or monthly basis.
Required rate of return : If Stock A's beta were 1.8, then what would be A's new required rate of return? Round your answer to two decimal places.
Present value of an ordinary? annuity : What is the present value of ?$2 comma 000 per year for 9 years discounted back to the present at 11 ?percent?
What is the present value of the? liability : If the appropriate discount rate is 8 ?percent, what is the present value of the? liability?
Calculate the amount of money that will accumulate : Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3?, 7?, and 17 ?year(s).
What is the expected return on portfolio : The relevant risk -free rate is 7%, and the expected return on the market portfolio is 18%. What is the expected return on your portfolio?
Make a gui program that calculates the hypotenuse : Make a GUI program that calculates the hypotenuse of a right triangle after the user enters the lengths of the two short sides and clicks the Calculate button.
What is firm equity market beta : An identical firm that is entirely equity -financed has a market beta of 1.2. What is your firm's equity market beta?
What is bram market beta : The average annual return of the market portfolio is 12.5%, with a standard deviation of 4%. The covariance of the returns is 28.8%%. What is Bram's market beta

Reviews

Write a Review

Finance Basics Questions & Answers

  Determining the annuities due

Calculating Annuities Due. You want to buy a new sports car from Muscle Motors for $58,600. The contract is in the form of a 60-month annuity due at an APR.

  Explain nature of that study discussing research questions

Explain the nature of that study discussing the research questions, the data, the methodology and the results. Form what you believe would be an important next research question that would extend the results within that area of study.

  Calculating the number of periods

Calculating the Number of Periods. You've been offered an investment that will pay you 7 percent per year. If you invest $10,000, how long until you have.

  Jane stevens is 30 years old and she is reviewing her

jane stevens is 30 years old and she is reviewing her retirement plans.nbsp she currently has 20000 in a retirement

  Which scenario has a higher future value

Which scenario has a higher future value when you take the money from the account? Explain.

  Calculate the amount of profit that can be earned

Explain how this leader in your firm can speculate on the belief that the euro will be $1.41 in 12 months. Calculate the amount of profit (ignoring exchange rate fees) that can be earned and the percentage return achieved.

  Evaluate financial ratios

Search the internet for financial statements of publicly traded companies. Evaluate financial ratios in a minimum 1,200 words

  What is mercury''s financial breakeven point

Mercury Air's debt consists of $50,000 in accounts payable, $100,000 in 10 percent notes payable, and $240,000 in 8 percent bonds. Mercury has no preferred stock. If its marginal tax rate is 35 percent, what is Mercury's financial breakeven point?

  Why was the federal reserve system set up with regional bank

Why was the Federal Reserve System set up with 12 regional banks rather than one central bank as in other countries? Why was it made an independent quasi-governmental body and not a direct part of the federal government?

  What is the most expensive house you can afford

Based on your answer from part b, if you are planning on a 20% down payment, what is the most expensive house you can afford? Hint: Use the percentage formula.

  Assets with an expected return

How can you develop a portfolio of these two assets with an expected return of 19%. Please show work.

  What will the cash flows for this project be

If your cost of capital is 8 percent and your firm faces a 34 percent tax rate. What will the cash flows for this project be?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd