37. A man is planning to make an annual deposit starting at the end of 1st year expecting to have savings worth 400,000 pesos after 10 years. However, due to certain circumstances, the first deposit of the same amount was made at the beginning of the fifth year and was terminated after the sixth deposit. As a result the accumulated amount after ten years is 50% less than what is expected. Assume that money is compounded annually. What is the nominal interest rate? A. 15.67% B. 12% C. 14.43% D. 17.65%

37. A man is planning to make an annual deposit starting at the end of 1st year expecting to have savings worth 400,000 pesos after 10 years. However, due to certain circumstances, the first deposit of the same amount was made at the beginning of the fifth year and was terminated after the sixth deposit. As a result the accumulated amount after ten years is 50% less than what is expected. Assume that money is compounded annually. What is the nominal interest rate? A. 15.67% B. 12% C. 14.43% D. 17.65%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 16PROB

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You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
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