What annual interest rate is required to accumulate
Course:- Finance Basics
Reference No.:- EM13298346

Assignment Help
Assignment Help >> Finance Basics

Consider the surgery centers' goal of having @200,000 available in five years to buy a new Patient billing system.
a. What lump sum amount must be invested today in a CD paying 10 percent annual interest to accumulate the needed $200,000?
b. What annual interest rate is needed to produce $200,000 after five years if only $100,000 is invested?

Now consider a second alternative for accumulating funds to buy the new billing system.In lieu of lump sum investment, assume that five annual payments of $32,000 are made at the end of each year

a.What type of annuity is this?

b.What is the present value of this annuity if the payments are invested in n account that pays 10 percent interest annually? 10 percent compounded annually?

c. What is the future value of this annuity if the payments are invested in an account that pays 10 percebt interest annually? 10 percent compounded semi annually?

d. What annual interest rate is required to accumulate the $200,000 needed to make the purchase , assuming a $32,000 annual payment?

e.What size annual payment is needed to accumulate $200,000 under annual compounding at a 10 percent interest rate?

f. Suppose the payments are only $16,000 each, but they are made every six ,months, starting six months from now.What will the future value be if the 10 payments were invested at 10 percent annual interest? If invested at Banksouthat 10 compounded semi annually?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
Calculate the standard deviation of the monthly HPRs. Identify and briefly discuss all the Betas. In your discussion, compare the Betas to those found on Bloomberg and Yaho
Can we reject the null hypothesis that the sample is a random sample from a normal population with µ= 22 and σ=8? Use α=0.01 1 tail. Assume the sample mean is in the correct d
Explain briefly why operational risk is important. Though the cost of implementing a new operational risk management system is expensive, determine why it could also improve t
Lance Industries borrowed $130,000. The company plans to set up a sinking fund that will repay the loan at the end of 18 years. Assume a 6% interest rate compounded semiannu
Suppose the pound trades for 13.0840 pesos and the guilder trades for 4.5070 pesos or 65.4090 yen. What is the cross rate between the pound and the yen, that is, how many po
What was the percentage increase or decrease in net sales from 2014 to 2015? What was the percent increase or decrease in net property, plant and equipment from 2014 to 2015?
What are the strengths and weaknesses of each primary competitor in terms of sales, quality, distribution, price, production capabilities, reputation, and products/services?
Ramon Inc. reported net income of $300,000 for the year ended December 31, 2006. Ramon Inc. had 50,000 shares of common stock outstanding throughout 2006. On January 1, 2006,