Effective annual rate, Financial Management

Assignment Help:

You are interested in saving money for your first house. Your plan is to make regular deposits into brokerage account which will earn 14%. Your first deposit of $5,000 will be made today. You also plan to make four additional deposits at the beginning of each of the next four years. Your plan is to increase your deposits by 10% a year. (That is, you plan to deposit $5,500 at t = 1, and $6,050 at t = 2, etc.) How much money will be in your account after 5 years?

Effective Annual Rate (EFF%) = (1.14 / 1.10) - 1

                                               = 1.03636 - 1

                                               = .03636 = 3.63%

With a financial calculator, enter the following:

N = 5 years,   I/ Y = 3.63%,   PV = 0,   PMT = - $5,000,   CPT FV = $26,882.08

 


Related Discussions:- Effective annual rate

Return enhancement on investment, Return Enhancement can be explained...

Return Enhancement can be explained using following heads: Use of a Valuation Model: An investor having access to a bond valuation model can bu

Financial institution versus raising in financial markets, You are the chie...

You are the chief financial office (CFO) of Gaga Enterprises, edgy fashion design firm. Your firm needs $10 million to expand production. How do you think the process of raising th

ASSIGNMENT, Assume that we have the following data: C=100+0.50Y Ip=100-20r...

Assume that we have the following data: C=100+0.50Y Ip=100-20r Mt=0.10Y Ms=100-10r M=80 a. Build the IS-LM function. b. If we assume an increase in Investments by 100 units, p

Claim for refund, Claim for Refund - A refund isn't automatically mailed if...

Claim for Refund - A refund isn't automatically mailed if one is due. A taxpayer whether individual orbusiness, should file a request on a form. It should also be filed within the

Rejecting proposed projects when using internal rate of retu, What is the d...

What is the decision rule for accepting or rejecting proposed projects when using internal rate of return? Whenever the internal rate of return is equal or greater than to the

What is the basic approach of the financial management, Q. What is the basi...

Q. What is the basic Approach of the financial management ? 1) The first approach view finance as to providing the funds needed by a business on the most suitable terms. This ap

Management, . Why do some organizations seem to have a new CEO every year o...

. Why do some organizations seem to have a new CEO every year or two, whereas others have top leaders who stay with the company for many years (e.g., John Chambers at Cisco)? What

Budget classification on the basis of flexibility, ON THE BASIS OF FLEXIBIL...

ON THE BASIS OF FLEXIBILITY • Fixed budget: this is designed to stay unchanged irrespective of the volume of output or turnover attained.  The budget remains unchanged over

The financial services authority in the united kingdom, The Financial Servi...

The Financial Services Authority in the United Kingdom: The Financial Services Authority (FSA) in the United Kingdom (UK) is the financial watchdog. It is a company limited by

Write Your Message!

Captcha
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