Homer promises Bart that he will give him $8,000 upon his graduation from college in 13 years at Springfield U. How much must Homer invest today to make good on his promise, if Homer can earn 6% on his money?
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Present value of investment is the value of investment after discounting them using the required rate of return at the present. It will consider the effect of time value of money.
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- Willie deposits a fixed monthly amount into an annuity account for his child’s college fund. He wishes to accumulate a future value of $125,000 in 15 years. Assuming an APR of 3.5% how much money should Willie deposit monthly in order to reach his goal. How much of the $125,000 will Willie ultimately deposit in the account, and how much is interest earned?Andrew deposits $306.06 each month into an annuity account for his child's college fund in order to accumulate a future value of $80,000 in 16 years. How much of the $80,000 will Andrew ultimately deposit in the account, and how much is interest earned? Round your answers to the nearest cent, if necessary.Robert has inherited some money from his great-grandfather. He will get $5,533.00 when he graduates college (at age 22) and an additional $13,597.00 at the age of 25. He is currently 20 years old. Robert will invest each cash flow in an account that pays 6.00% APR. What will be the future value of this account if he keeps it invested until he turns 30?
- Willie deposits a fixed monthly amount into an annuity account for his child's college fund. He wishes to accumulate a future value of $75,000 in 15 years. Assuming an APR of 3.5%, how much will Wilie deposit monthly to reach his goal? How much of the 75,000 will Willie ultimately deposit and how much is interest earned?Jose wants to cash in his winning lottery ticket. He can either receive eight, $6,000 annual payments starting today, or he can receive one lump-sum payment today based on a 3% annual interest rate. What would be the lump-sum payment?Jack is celebrating his 24th birthday today. He wants to start saving in one year’s time, and retire after his 70th birthday. He decides to deposit the same amount of money on his birthday each year in a bank which offers 3% interest per year, compounded annually. Jack hopes to be able to accumulate SGD 700,000 for his saving account, after he made his scheduled deposit on 70th birthday). Determine the amount he must deposit annually. Round to nearest dollar
- Marc has nothing saved for retirement. He wants to receive $46,000.00 per year for 5 years during retirement. The first of these payments will be received in 7 years. Marc can earn a return of 9.38 percent per year. How much does Marc need to save each year for 6 years to have exactly enough to meet his retirement goal if he makes his first annual savings contribution in 1 year and all savings contributions are equal? O $21,324.88 (plus or minus 10 dollars) O $25,513.05 (plus or minus 10 dollars) O $23,325.15 (plus or minus 10 dollars) O $20,819.31 (plus or minus 10 dollars) O none of the answers are within 10 dollars of the correct answer8. Hersch's parents set up a fund to help him pay for college. They want him to receive $3000 each month for 5 years, beginning 18 years from now. They plan to invest the money today in an account that pays 4.2% per year compounded monthly. a) How much money must be in the account 18 years from now? b) How much must Hersch's parents invest today? c) How much interest will the fund earn?Justin is saving for his retirement 21 years from now by setting up a savings plan. He has set up a savings plan wherein he will deposit $104.00 at the end of every six months for the next 11 years. Interest is 7% compounded semi-annually. (a) How much money will be in his account on the date of his retirement? (b) How much will Justin contribute? (c) How much will be interest?
- Jack wins a lottery. He now wants to put a fixed amount into a savings account paying j1= 4% to cover the university cost of his child 10 years from today. The costs are estimated to be $8500 for the first year, $8500(1.03) for 2nd year, $8500(1.03)2 for the 3rd year and in the fourth year $8500(1.03)3 . How much does Jack need to deposit today to cover the above cost, starting 10 years from today?James deposits $266.40 each month into an annuity account for his child's college fund in order to accumulate a future value of $80,000 in 18 years. How much of the $80,000 will James ultimately deposit in the account, and how much is interest earned? Round your answers to the nearest cent, if necessary.Mike joins a savings program where he deposits $1000 at the beginning of each year for 25 years, In return, he will earn a perpetuity paying $6300 per year with the first payment at the end of the 30th year. The effective interest rate is 5% for the first 20 years and 8% afterward • a) Will Mike have accumulated enough to fund the perpetuity? • b) If your answer above is no, find the unique extra deposit X that Mike has to make at the end of the 28th year in order to fund the perpetuity + Drag and drop an image or PDF file or click to browse.