Part A). UVW will invest £1,500 per quarter for her retirement compounding quarterly for 32 years. The current annual discount rate is 8%. She has a choice of making that payment of £1,500 at the beginning or the end of the quarter. In which account will UVW has more money in present value and by how much? Which account will earn the most interest and by how much? Show all the calculations. Formulas and/or diagram(s) are essential.

Part A). UVW will invest £1,500 per quarter for her retirement compounding quarterly for 32 years. The current annual discount rate is 8%. She has a choice of making that payment of £1,500 at the beginning or the end of the quarter. In which account will UVW has more money in present value and by how much? Which account will earn the most interest and by how much? Show all the calculations. Formulas and/or diagram(s) are essential.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Choose the appropriate formula type for answering the following question: Suppose you want to have $410,500 for retirement in 15 years. Your account earns 6.5% interest. How much would you need to deposit in the account each month? Annuity Compound Interest Loan/Payout Annuity
Holly Krech is planning for her retirement, so she is setting up a payout annuity with her bank. She wishes to receive a payout of $1,900 per month for twenty years. (a) How much money must she deposit if her money earns 7.8% interest compounded monthly? (Round your answer to the nearest cent.)___________ $ (b) Find the total amount that Holly will receive from her payout annuity. Thank you!
UVW will invest £1,600 per quarter for her retirement at 3% compounding quarterly for 32 years. She has a choice of making that payment of £1,600 at the beginning or the end of the quarter. In which account will UVW has more money in present value and by how much? Which account will earn the most interest and by how much?
CHAR is offered an annuity that will pay P24,000 per year for 11 years (the first payment will occur one year from today). If CHAR feel that the appropriate discount rate is 13%, what is the annuity worth to you now? Note: Round off your answers to whole numbers. No decimal places
If you owe $32,000 payable at the end of five years, what amount should your creditor accept in payment immediately if she could earn 12 percent on her money? Use Appendix B for an approximate answer, but calculate your final answer using the formula and financial calculator methods. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Present value
Suppose you have estimated that you will need $2,500 per month in your retirement to meet your expenses and live comfortably, and that you have found or chosen a fund (account) which pays monthly interest 4% APR . What principal, or balance, will your account need to maintain in order to be able to pay you this amount each month? Round/take your answer to the nearest cent.
3. Laura invested $325 per month into a retirement plan with an APR of 2.2% for 35 years. a. How many payments will she make altogether? b. How much will she invest altogether? c. What will the final balance of her retirement plan be? d. How much of the final account balance is interest? e. What percent of the final account balance is interest? Round to one decimal place.
Samuel wants to make regular annual payments of size P dollars into an annuity that pays interest of an annual rate of 0.25 or 25%. He wants to have 1.5 times the invested amount in the account after 5 years. A) Determine the size, P of the required annual payment. B) Create a table and do a step by step calculation to verify your answer in part A
answer the following the topic is logical operation 1.Clarence has already accumulated 250,000 pesos in his retirement plan. If she contributes 8,000 pesos at the end of every quarter for the next eight years, and 7,000 pesos per quarter for the next 7 years, what amount will he have in his retirement plan at the end of 15 years? Assume his plan will earn 6.8% compounded quarterly.2. Calculate the future value of an ordinary annuity consisting of bimonthly payments of 7,430 pesos for 7 years if the rate of interest was 12.6% compounded bimonthly for the three years and will be 10.8% compounded bimonthly for the last four years.
a. You plan to invest $5,000 in an individual retirement arrangement today at a nominal annual interest rate of 10%, which is expected to apply to all future years. 1. How much you will have in the account at the end of 15 years if interest is compounded (1) annually? (2) Semiannually? (3) Quarterly and (4) daily (assume a 365-day a year)? 2. Compute effective annual rate and explain the relationship exists between compounding frequency and the nominal and effective annual rates ?
b) Suppose you begin saving for your retirement by depositing $2,000 per year in an IRA. If the interest rate is 7.5%, how much will you have in 40 years if the payments are made: at the end of the year (ordinary annuity)? at the beginning of the year (annuity due)?
Linda expects to receive P35,569.22 , 9 years from now. How much should she invests for three consecutive years (annually) starting THIS YEAR if the interest rate is 0.250? Use knowledge about ANNUITIES in solving this

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