Lump sum equivalent to the monthly payments

Assignment Help Financial Management
Reference no: EM13914561

Steve Lowe must pay his property taxes in two equal instalments on December 1 & April 1. The two payments are taxes for fiscal year that begins on July 1 & ends the following June 30. Steve purchased a home on September 1. Assuming the annual property taxes remain at $3400 per year for the next several years, steve plans to open a savings account and to make uniform monthly deposits the first of each month. The account is to be used to pay the taxes when they are due.

To open the account, Steve deposits a lump sum equivalent to the monthly payments that will not have been made for the first year's taxes. The savings account pays 3% interest, compounded quarterly (march 30, june 30, September 30, December 31) How much money should Steve put into the account when he opens it on September 1? What uniform monthly deposit should he make from that time on?

Reference no: EM13914561

Questions Cloud

Good economic sense to exercise : Which of the following statements is CORRECT?
All capital has an employment contract with its newly hired : All Capital has an employment contract with its newly hired CFO which requires a lump sum payment of $2.5 million to be paid to the CFO upon the successful completion of his first three years of service. Alliance wants to set aside an equal amount of..
Sketch a graph of the polar equation : Sketch a graph of the polar equation r = 3 cos 2θ. It may be helpful to first sketch a graph of the equation in rectangular coordinates and follow the example 5 in your text
Units of production and declining balance methods : Prepare a table to allocate the lump-sum purchase price to the separate assets purchased.Prepare the journal entry to record the purchase.Compute the depreciation expense for year 2013 on the building using the straight-line method, assuming a 15-yea..
Lump sum equivalent to the monthly payments : Steve Lowe must pay his property taxes in two equal instalments on December 1 & April 1. The two payments are taxes for fiscal year that begins on July 1 & ends the following June 30. Steve purchased a home on September 1. To open the account, Steve ..
Find the incremental costs of a policy initiative : Find the incremental costs of a policy initiative that increases the phosphorus abatement level from its baseline of 30 percent to 45 percent.
Post the transactions to t accounts : The following transactions pertain to Boykin Corporation for 2013: Jan. 1 Began operations when the business acquired $25,000 cash from the issue of common stock. Mar. 1 Paid rent for office space for two years, $8,400 cash.
Determining how long an asset will benefit the company : Determining how long an asset will benefit the company. Deciding to use cash flows from operations to purchase long-term assets.
Determine the dollar value of incremental benefits : Suppose the federal government is considering an air quality policy initiative that would effectively increase abatement (A) of ozone from 10 percent to 20 percent and that the marginal social benefit (MSB) of ozone abatement in millions of dollar..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Ratio analysis for government financial condition analysis

What general problems must be addressed in doing ratio analysis for government financial condition analysis? Do traditional solvency ratios adequately address financial condition analysis concerns? Provide your responses supported by text and other r..

  Assume customers will spend same amount on either version

Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza that will be low in cholesterol and contain no Tran’s fats. The firm expects that sales of the new pizza will be $18 million per year. Assume customers ..

  Weighted-average process costing to account for production

Victory Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. Instead of being 30% complete with respect to ..

  What is the ytm and current yield

Rolling Company bonds have a coupon rate of 9.40 percent, 19 years to maturity, and a current price of $1,256. What is the YTM? The current yield?

  What should be its price in the bond market

If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7%, paid semiannually, and has a yield to maturity (YTM) of 4.2%, what should be its price in the bond market (ie, PV)?

  The annual cost of capital for this type of business

Roxanne invested $230,000 in a new business 9 years ago. The business was expected to bring in $2,000 each month for the next 18 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 9% with month..

  Including the final quarter when the principal falls due

If interest rates were 4 percent, how much would you give today for a loan with a $100,000 balloon principal payment due in a year and that will pay $16,000 in interest at the end of each quarter, including the final quarter when the principal falls ..

  1 evaluate the performance of a company using various

1. evaluate the performance of a company using various financial analytical tools.2. analyse different patterns of

  How much is in the IRA when Bob retires

Bob makes his first $400 deposit into an IRA earning 8.1% compounded annually on his 24th birthday and his last $400 deposit on his 43rd birthday (20 equal deposits in all). With no additional deposits, the money in the IRA continues to earn 8.1% int..

  What price to sell them that product

If you are renewing a contract with a company where inflation is expected to occur, would you increase or decrease the products sold there? You expect payments with their currency. How would you determine when to get paid and at what price to sell th..

  What is the value of the stock ex rights

Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $50. At the close of business the day before the ex-rights day, the c..

  Information about elkridge sporting goods

Given the following information about Elkridge Sporting Goods, Inc., construct a balance sheet for June 30, 2014. On that date the firm had cash and marketable securities of $25,135, accounts receivable of $43,758, inventory of $166,700, net fixed as..

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