Annuity

What annual interest rate is needed to produce $200,000 after five years if only $100,000 is invested?

10. An investment of $1,000 today will grow to $1,100 in one year. What is the continuously compounded rate of return?

21. If you invested $100,000 in a one year certificate of deposit that pays 5% interest compounded semiannually, what would be your balance after one year (rounded)?

2. (Q. 6 in B) What is the present value of a four-year annuity of $100 per year

1. What is the present value of a 10-year, pure discount bond paying $1,000 at maturity if the appropriate interest rate is:

If the interest rate on this investment is eight percent, what is the approximate current value of these future payments? (Points : 3)

2. If the interest rate is 10% and cash flows are $1,000 at the end of year one and $2,000 at the end of year two, then the present value of these cash flows is

How much money should be deposited in a bank paying a yearly interest rate of 6% compounded monthly so that after 3 years the accumulated amount will be $20,000?

11. Starting today, Sandy sets aside $10,000 at the beginning of each year into a bank account that pays an annual effective interest rate of 5.5%. She makes 25 such deposits. Thirty years from today, Sandy uses the accumulated value in the account to purchase an annuity that pays $X at the beginning of each year for 25 years. Determine X.

Therefore, if Joe continues to invest $5,000 annually ($416.67 monthly) into his saving account for the next 25 years, his investment, assuming a current balance of $5,000 compounded daily at 0.01% (as currently being offered by WellsFargo), will amount to about $130,170 . Now, Joe has also invested in certificate of deposits (CDs). He reported as simply been reinvesting his original $5,000 for the past six years. Assuming a stated 0.30% interest rate on a two year CD with daily compounding, his $5,000 investment is now worth about $5,091 . However, he seeks to reinvest this until retirement. Performing similar calculations, we obtain a grand total of $5,488 . This is what his CD invest would amount to if he were to reinvest the current $5,091 at a 0.30% interest rate with daily compounding for the next 25 years.

We wish to compute the present value. The present value is the dollar amount which, if invested at r percent compounded annually, would grow to an amount C after n years.

*Find the interest rate for the given deposit and compound amount $8000 accumulating to $1167212 compounded quarterly for 8 yrs

As you increase the length of time involved, what happen to the present value of an annuity? What happens to the future value?

A sum of $ 5000 is invested at a compound interest rate of 6.3 % per annum. (a) Write down an expression for the value of the investment after n full years.

This section reviews basic time value of money calculations. The concepts of future value, present value and the compounding of interest are dened and discussed.