What interest rate must you invest to achieve your goal

Assignment Help Financial Management

Reference no: EM132009565

Assume that you need $1,000 four years from today. Your bank compounds interest at an 8% annual rate. Present the answer, the solution, and the conclusion for the following questions.

1. How much must you deposit one year from today to have a balance of $1,000 in your account four years from today?

2. If you want to make equal payments each year, how large must each of four payments be if the first deposit is made one year from today?

3. If your father were to offer either to make the payments calculated in part (b) or to give you a lump sum of $750 in one year, which would you choose?

4. If you have only $750 in one year, what interest rate, compounded annually, would you have to earn to have the necessary $1,000 four years from today?

5. Suppose you can deposit only $186.29 each for the next four years, beginning in one year, but you still need $1,000 in four years. At what interest rate, with annual compounding, must you invest to achieve your goal?

Reference no: EM132009565

Questions Cloud

Compute the value of this stock price in five years : Compute the value of this stock price in five years Calculate the present value of these cash flows using an 11 percent discount rate.

What states are doing to encourage growth : Find the report "Making" Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment".

What is the scenario when overtime is the right solution : What is the scenario when Overtime is the right solution and when is it the wrong solution?

Analyze the object according to requirements for the week : Find & Post (or post a link to) a concept of Rhetorical Public Address (photo, short video, a brief piece of writing, song, etc. that no one else in the class

What interest rate must you invest to achieve your goal : At what interest rate, with annual compounding, must you invest to achieve your goal?

Estimates critical to effective project management : Why are accurate estimates critical to effective project management? How does the culture of an organization influence the quality of estimates?

Advantages for establishing long-term partnerships : Identify and describe three advantages for establishing long-term partnerships. An you provide examples and any references?

Analyze the overall manner in which organizational structure : Propose two (2) ethical concerns that management may need to address related to the issue you selected in Assignment .

Determine the amount of cost recovery : Determine the amount of cost recovery that could be taken in 2014 if the fair market value of the property were $350,000

User Account

All Pages