Investments at the time of the last deposit

Assignment Help Financial Management

Reference no: EM13909454

At the end of each year Mr. Smith deposits $6,000 into an investment fund. The fund pays out interest each year at an annual effective interest rate of 6%. Mr. Smith is only able to reinvest this interest at an annual effective interest rate of 4%. Assuming Mr. Smith continues to make his $6,000 deposits for twenty years, that he always immediately deposits all the interest paid out into the 4% account, and that makes no withdrawals, what’s the accumulated value of Mr. Smith’s investments at the time of the last deposit?

Reference no: EM13909454

Questions Cloud

Cash flows are expected to grow at an annual rate : You are evaluating the potential purchase of a small business currently generating $42,500 after-tax cash flow (Do=$42,500). On the basis of a review of similar-risk investment opportunities, you must earn an 18% rate of return on the proposed purcha..

What changes would you make to the provided schema : What changes would you make to the provided schema

Arctic cat produces snowmobiles for sale : Arctic Cat produces snowmobiles for sale. Identify some of the variable and fixed product costs associated with that production.

Data for the cytochome-c protein : Based on the amino acid sequence data for the Cytochome-C protein, chimpanzees and humans share an identical coding sequence. What other species identified on the chart has a coding sequence that is most closely related to the humans and chimpanze..

Investments at the time of the last deposit : At the end of each year Mr. Smith deposits $6,000 into an investment fund. The fund pays out interest each year at an annual effective interest rate of 6%. Mr. Smith is only able to reinvest this interest at an annual effective interest rate of 4%. w..

Why does hamlet wish too unnecessarily solid tissue : 1. Why does Hamlet wish this "too, unnecessarily solid tissue would condense"? What's the explanation behind his self-dangerous slants? Under what circumstances, and at which scraps of the play, does Hamlet harp on the probability of conclusion his o..

Comparison of at least two types of specialized databases : A comparison of at least two types of specialized databases, such as the following-Mobile data terminals,AFIS,Live scan,Facial recognition,Iris scan

Expected rate of return on the market : A share of stock is now selling for $120. It will pay a dividend of $10 per share at the end of the year. Its beta is 1. What do investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 6% and the expected rate of r..

Should we expect its variable and fixed costs for this model : Should we expect its variable and fixed costs for this model to stay within the relevant range? Explain.

User Account

All Pages