Working in business to learn the ropes

Assignment Help Financial Management

Reference no: EM13849358

You have a two children, A and B. Child A is not going to college but is working in a business to learn the ropes. Child A plans on opening a business someday. Child B is attending college. You put a certain amount of money into an account. From this account, Child B will receive $2,000 per month for the next four years. Whatever is left at that time will go to Child A to help start the business. You want Child A to receive $96,000 at that time. The account pays 7% annually, compounded monthly. How much money do you need to start the account? Show your work.

Reference no: EM13849358

Questions Cloud

What is the present value of an ordinary annuity : What is the PV of an ordinary annuity with 8 payments of $6,250 if the appropriate interest rate is 5.5%?

Present value of prize at interest compounded annually : A major lottery advertises that it pays the winner $10 million. However this prize money is paid at the rate of $500,000 each year (with the first payment being immediate) for a total of 20 payments. What is the present value of this prize at 10% int..

Spot rates-discount rate : Suppose the spot rates for 1 and 2 years are s1=6.3% and s2=6.9% with annual compounding. Recall that in this course interest rates are always quoted on an annual basis unless otherwise specified. What is the discount rate d(0,2)?

What is the future value-assume annual compounding : What is the future value of $1,200 a year at the end of each year for 40 years at 8 percent interest? Assume annual compounding.

Working in business to learn the ropes : You have a two children, A and B. Child A is not going to college but is working in a business to learn the ropes. Child A plans on opening a business someday. Child B is attending college. You put a certain amount of money into an account.

Amortization with equal payments : Amortization with Equal Payments- Prepare an amortization schedule for a five-year loan of $67,500. The interest rate is 7 percent per year, and the loan calls for equal annual payments. How much interest paid in the third year? How much total intere..

How much needs to be deposited to set up the annuity : A grandfather sets up a trust for his only grandchild. The trust consists of an annuity that will pay $5,000 monthly to the grandchild for 18 years. The annuity pays an annual return of 5% and makes the payments monthly at the end of the month. The a..

The payments are made monthly : You take out a 4 year car loan for $18,000. The loan has a 4% annual interest rate. The payments are made monthly. What are the monthly payments?

Treasury bond-default risk premium and liquidity premium : A 5-year Treasury bond has a 4.05% yield. A 10-year Treasury bond yields 6.15%, and a 10-year corporate bond yields 9.35%. The market expects that inflation will average 2.1% over the next 10 years (IP10 = 2.1%). A 5-year corporate bond has the same ..

User Account

All Pages