Reference no: EM131438819
What is the periodic rate if the nominal rate is 8.65% compounded monthly?
Solve the Time Value of Money Problems -
Show inputs and final answer. Show all your work for full credit.
1. You want to save your money for a down-payment on a home in ten years. You currently have $5,000 invested today at a 5% rate compounded annually. You plan to deposit $1000 at the end of each year for ten years. What is the maximum amount you will have at the end of ten years?
2. You find out you will inherit $100,000 in six years. If the current interest rate is 5% compounded quarterly, what is the present value of your inheritance?
3. You plan to deposit the following amounts in your savings account at the beginning of each year. In Year 1, you plan to deposit $3000. In year 2 and Year 3, you plan to deposit $4000 and in Year 4 and 5, you plan to deposit $5000. Assume the savings account earns 3.5% compounded annually. If you do as you plan, how much will you have at the end of ten years?
4. You plan to deposit the following amounts in your savings account at the beginning of each year. In Year 1, you plan to deposit $3000. In year 2 and Year 3, you plan to deposit $4000 and in Year 4 and 5, you plan to deposit $5000. Assume the savings account earns 3.5% compounded semiannually. If you do as you plan, how much will you have at the end of ten years?
5. You deposit equal payments of $1000 in the bank for the next 5 years only. Assume the payments are made at the end of the year. What is the interest rate that you would earn if you have $6,200 at the end of five years? Assume annual compounding. Does your equal payment period match the compounding period?
6. Assume you receive payments from an investment at the end of each year. What is the present value of an investment that promises to pay the following: $240 received at the end of each year for 3 years. Assume an 8% interest rate compounded semiannually. Does your equal payment period match the compounding period?
7. You deposit equal payments of $1000 in the bank for the next 6 years. Assume the payments are made at the beginning of each year. What is the nominal interest rate you earn if you have $8,000 at the end of six years with annual compounding? Does your equal payment period match the compounding period?
8. You deposit equal payments of $1000 in the bank for the next 5 years only. Assume the payments are made at the end of the year. What is the interest rate that you would earn if you have $6,200 at the end of five years? Assume annual compounding. Does your equal payment period match your compounding period?
9. Answer A or B
A. You deposit equal payments of $1000 in the bank for the next ten years. Assume the payments are made at the beginning of each year. Given you will have $18,000 at the end of ten years with quarterly compounding? What is the effective rate, the nominal rate and the periodic rate of this investment? Does your equal payment period match your compounding period?
B. Loan Amortization - You borrowed $5,000 from the bank. You plan to pay it back in three years. You are charged 6% annual compounding. Complete the following table.
Year
|
Beginning Balance
|
Total Payment
|
Interest Paid
|
Principal Paid
|
Ending Balance
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
3
|
|
|
|
|
|
Introduces a clothing brand for adults
: Eania Inc. manufactures toys and games for children. After achieving a high growth rate and establishing itself as a market favorite, Eania introduces a clothing brand for adults. In this scenario, Eania pursues a __________.
|
Types of market segmentation
: Through the introduction of these two models, Rotego intends to present itself as a company that caters to people across all income groups. In this scenario, which of the following types of market segmentation does Rotego employ?
|
What distribution might be appropriate to model the failure
: PLE collects a variety of data from special studies, many of which are related to the quality of its products. The company collects data about functional test performance of its mowers after assembly; results from the past 30 days are given in the..
|
Possession of an antique royal crown
: Archofan Associates, a firm that specializes in the sale of historical artifacts, comes into possession of an antique royal crown. It confirms the authenticity of the crown and holds an auction to sell it. Several interested buyers participate in ..
|
What is the periodic rate
: What is the periodic rate if the nominal rate is 8.65% compounded monthly? You plan to deposit $1000 at the end of each year for ten years. What is the maximum amount you will have at the end of ten years
|
What does the term environmental justice refer to
: What does the term "environmental justice" refer to? What does it mean for a company to be "carbon-neutral"? What it comes to the three R's (reduce, reuse, recycle)...what do they each mean and which one is most important?
|
How will the given changes improve worker safety
: Compare and contrast the newly revised GHS-based requirements for information on Safety Data Sheets. How will these changes improve worker safety?
|
Details on the optimization component including the controls
: Develop and conduct a t-test to evaluate whether model output is consistent with system behavior. Use a level of significance (a) of 0.05 - What sample size is needed to guarantee a power of 0L80 or higher - Develop a simulation model for this prop..
|
Discuss the osha guidance document for hazard evaluation
: Discuss the OSHA Guidance Document for Hazard Evaluation criteria for including a substance in a HazCom program chemical inventory.
|