Finance-annuity-present value

Assignment Help Finance Basics
Reference no: EM1329820

Sonia Gomez, a 45-year-old widow, wishes to accumulate 4250,000 over the next 15 years to supplement the retirement programs that are being funded by the federal government and her employer. She expects to earn an average annual return of about 8% by investing in a low-risk portfolio containing about 20% short -term securities, 30% common stock, and 50% bonds.

Sonia currently has 431,500 that at an 8% annual rate of return will grow to about $100,000 at the end of 15 years (found using time-value techniques that will be described in Chapter 4 Appendix). He financial adviser indicated that for every $1,000 Sonia wishes to accumulate at the end of the 15 years, when will have to make an annual investment of $36.38. (This amount is also calculated on the basis of an 8% annual rate of return using the time-value techniques that are described in the Chapter 4 Appendix). Sonia plans to accumulate needed fund by making equal, annual, end-or year investments over the next 15 years.

A) How much money does Sonia need to accumulate by making equal, annual, end-of-year investments to reach her goal of $250,000?

A) How much must Sonia deposit annually to accumulate at the end of year 15 the sum calculated in part a?

Reference no: EM1329820

Questions Cloud

Compound interest-future value of an annuity : An investor deposits $50,000 today in the interest bearing account. How much would the investor accumulate by the end of five years if interest is compounded monthly?
Determining the retirement annuity : What annual contributions to retirement fund will let you to receive the $60,000 annually? What annual contributions are needed if the contributions are made at the beginning of each year?
Present value concept and calculating present value : Assume you're to receive the stream of annual payments (also called an "annuity") of $9000 every year for three years starting this year. The discount rate is 6%. What is the present value of such three payments?
Explain about ebusiness web sites : Explain about eBusiness Web sites explain how the supply chain was modified from brick and mortar by the Web sites
Finance-annuity-present value : How much money does Sonia require to accumulate through making equal, annual, end-of-year investments to reach her goal of $250,000? How much should Sonia deposit annually to accumulate at end of year 15 the sum calculated in part a?
Explain what is internet2 : Explain What is Internet2 and What are the main impacts of Internet2 on E-Commerce and What is the future of Internet2
Annuity and perpetuity calculations of sunrise industries : Sunrise Industries wishes to accumulate funds to offer retirement annuity for its vice president of research, Jill Moran. Ms Moran, by contract, will retire at the end of exactly 12 yrs. Draw the timeline describing all of the cash flows associated..
Explain payment options and strategy : Explain Payment Options and Strategy and Prepare and one page memo in which you make a specific recommendation to Rod and Martha
Periodic annuity amounts and present value of deferred : If I borrow 60,000 from bank at 10% interest over the seven-year life of loan, what equal annual payments should be made to discharge the loan plus pay the bank its required rate of interest. Annual payments_____.


Write a Review


Finance Basics Questions & Answers

  Financial basics to be considered for short term borrowing

What financial basics should be considered when determining the most appropriate amount of short term borrowing

  Computation of incremental cash flows and free cash flows

Computation of incremental cash flows and free cash flows and What is the present value of the free cash flows of this project

  Multiple choice questions on inflation

Multiple choice questions on Inflation, EOQ and Basic accounts - Rocky Mountain Utilities then uses the coals to generate electricity, which it makes to its customers

  Time value of money-unearned revenue

What are examples of long-term notes payable in our personal finances? Why is unearned revenue considered a liability?

  Executive summary of future trends

Make a executive summary in which you recognize and discuss three to five evolving trends which influence innovation.

  Calculation of after-tax cost of debt

Calculation of After-Tax Cost of Debt and calculate the expected net present value, profitability index, internal rate of return

  Problem regarding the time value of money

Smolinski company is considering an investment which will return a lump sum of $5000,000 five years from now. What amount should simolinski company pay for this investment to earn a 15% return.

  Pv of future cash flows and multiples based accounting

How are valuations based upon financial statement data affected by the companies' financial reporting choices and earnings management?

  Present value-interest and time value of money

What single payment could be made at beginning of first year to achieve this objective? What amount could you pay at the end of each year annually for 10 years to achieve this same objective.

  Objective type questions on decision on investments

Objective type questions on decision on investments, inventory and risk management and Common stockholders are most concerned with

  Explain the finding payback period

Explain the finding payback period and NPV at given payback period and explain Does the movie have positive NPV if the cost of capital 10%

  Find the controls and weaknesses in the controls

Find the controls and weaknesses in the controls, Misappropriation of funds, Audit procedures and to test the control system.

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