How much must you deposit in an account today

Assignment Help Financial Management
Reference no: EM131970803

1. A loan company will lend you $10,000 today with terms that require you to pay off the loan in thirty-six monthly installments of $500 each. What is the effective annual rate of interest that the loan company is charging you?

2. Suppose you wish to retire forty years from today. You determine that you need $50,000 per year once you retire, with the first retirement funds withdrawn one year from the day you retire. You estimate that you will earn 6% year per year on your retirement funds and that you will need funds up to and including your 25 birthday after retirement.

a. How much must you deposit in an account today so that you have enough funds for retirement?

b. How much must you deposit each year in an account, starting one year from today, so that you have enough funds for retirement?

3. Using interest rate of 5% per year, what is the value today of the following cash flows:

Years From today

Cash flow ($)

1

0

2

0

3

10,000

4

10,000

 

 

Reference no: EM131970803

Questions Cloud

What is the cost of equity for serenity : Assume SRC would incur flotation costs of 10% when issuing new shares of common stock SRC faces a marginal tax rate of 21%.
How much should she sell each pie for : If she wants to realize a $12,000 profit, how much should she sell each pie for? Assume no sales tax (round to the nearest penny and enter answer like this $9.4
How much money was borrowed : A loan's quirky terms require the first payment to be made at the moment the money is lent.
What is the weighted average cost of capital : Zeolok has a marginal tax rate of 40%. What is the weighted average cost of capital, WACC, for Zeolok?
How much must you deposit in an account today : How much must you deposit each year in an account, starting one year from today, so that you have enough funds for retirement?
What combination of segments will maximize profits : What combination of segments will maximize profits? What would be that new operating profit (loss) for the company as a whole?
What is the after-tax cost of debt for proton : Proton has a marginal tax rate of 40 percent. What is the after-tax cost of debt for Proton?
Annual rate of returns : Assume no dividends paid and the AAR and GAR are based on annual rate of returns. (round to the nearest $1 and show your answer like this $394)
What is the net present value for the project : Consider a project with the net cash flows shown below. The cost of capital for the project is 9.5%.

Reviews

Write a Review

Financial Management Questions & Answers

  What is expected return on portfolio

What is the expected return on a portfolio that is equally invested in the two assets?

  What is the coefficient of variation of best buy

What was the average return for Best Buy during this five year period? What is the coefficient of variation of Best Buy?

  Why might investor prefer convertible bond over regular bond

How is the profitability index calculated and how can it be used to choose between projects when funds are limited? Why might an investor prefer a convertible bond over a regular bond? The IF for the future value of an annuity is 4.5% at 8% for 4 yea..

  Prepare a statement of changes in equity

The equity of Net Facile, an Italian internet provider, as at 30 September 2005 and 2004 is as follows.- Prepare a statement of changes in equity for year ended 30 September 2005.

  Relationship between present value and future value

What is the relationship between Present Value and Future Value?

  What rate of return does investor expect to receive on stock

Digging Deep Company's common stock is currently selling for $159.62 per share. Next year, the company dividend is expected to be $10.05 per share. The projected growth at a rate of dividends for this stock is 4.83 percent per year. What rate of retu..

  Investors should expect to be compensated for bearing

Investors should expect to be compensated for bearing ____ risk, but they should not expect to be compensated for bearing ____ risk.

  Risk-free interest rate and the nominal interest rate

Explain the difference between the risk-free interest rate and the nominal interest rate.

  Prepare a revised budget for the stratton township park

MHA 5001- Prepare a revised budget for the Stratton Township Park reflecting these changes. Will these budget modifications meet the township's goal of reducing the subsidy it would have given to the park in the next fiscal year by 20%?

  Compute the market betas for assets x and y

Compute the market betas for assets X and Y. - Compute the correlations of assets X and Y with M. - Is the correlation indicative of which of these two portfolios ended up riskier?

  What is the amount of each deposit

Bill and Cathy will be retiring in fifteen years and would like to buy an Italian villa. what is the amount of each deposit?

  Commercial banking and global banking and markets

Commercial Banking-Global Banking and Markets and Global Private Banking

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!

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