(a) Rashidah intends to buy a motorcycle for his son, Ahmad, on his 20th birthday 4 years from now. Based on her survey, the price of motorcycle is approximately at RM8,000. She plans to start save money in the savings account that pays 4 percent interest annually. Compute how much should she deposit today to buy the motorcycle.

(a) Rashidah intends to buy a motorcycle for his son, Ahmad, on his 20th birthday 4 years from now. Based on her survey, the price of motorcycle is approximately at RM8,000. She plans to start save money in the savings account that pays 4 percent interest annually. Compute how much should she deposit today to buy the motorcycle.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 5CE

See similar textbooks

Similar questions

QUESTION 6 Caleb wants to go on a cruise for his Senior Trip. He needs $2500 for the trip. Caleb is currently a freshman. If he invests in a savings account that earns 6.1% interest compounded monthly, how much money does Caleb need to invest today?
Q1 : A) Jackie just turned 16 and wants to buy a car—now! Problem is, she has no money. She does have a $6000 inheritance that she can cash in in two years, when she turns 18. She wants to borrow against that inheritance from her dad and offers to pay the entire loan back in a single payment when she turns 18. Her dad agrees to lend her the present value of the $6000 that she will pay back in two years, and he will charge a token interest rate of 1.5% a year compounded yearly. How much should dad spot Jackie to buy the car? B) You've been saving up to buy Godot Ltd. The total cost will be £10 million. You currently have about £2.3 million. If you can earn 5% on your money, how long will you have to wait?
Question 2 You are working as a personal financial adviser. Alecia, one of your clients approached you for consultation about her plan to buy her dream house that costs $400,000. Alecia has a saving of $100,000 and is considering two alternative options: Investment 1: Investing that $100,000 in an investment that would pay a rate of return of 9% annually, compounding semi-annually for 15 years. Investment 2: Buying her dream house now. Then Alecia needs to borrow $300,000 mortgage from Prosperity Bank. The current interest rate the bank offered for the new mortgage is 4% annually, compounding monthly. The standard life of mortgage in Australia is 30 years. Required: A) Compute the effective annual interest rate (EAR) Alecia would actually get in Investment 1. B) Calculate the amount of money Alecia would accumulate in Investment 1 after 15 years. C) In Investment 1, how many year longer…
QUESTION 1 Raj (aged 33) and his wife, Anita (aged 30), have just purchased a new condominium in Bandar Sunway for RM550,OOO. They plan to take an 80% mortgage loan of RM440,OOO for the next 35 years. Raj has the following assets: a Nissan Cefiro worth RM65,OOO, stocks on Bursa Malaysia worth RM180,OOO, group insurance by his employer worth RM400,OOO and personal insurance with a face amount of RM250,OOO. He has a hire purchase loan on the Nissan Cefiro amounting to RM40,OOO. Should he pre-decease Anita, Raj plans to provide RM36,OOO per annum for Anita till she reaches age 70. He would also like to create an Emergency Buffer fund of RM50,OOO and Final Expenses fund of RM35,OOO. Using the Capital Liquidation method, compute the amount of additional life insurance that Raj needs to purchase. Assume a discount rate of 4% per annum and that income is received at the end of the period. In the example above; as life mortality is uncertain, Raj would like to provide for his wife, Anita, an…
1. Car loan Planning to give his son a car as a gift when he graduated from college 2 years from now, Adam decided to set aside a fund to enable him to pay the expected monthly amortization of P 21,500.00 every month for 3 years. If a bank offers to pay an interest of 7.5% compounding monthly, how much should be set aside in order to achieve his plan? Sketch a time diagram or timeline for this problem
1. Your sister is an incoming college freshman taking up a four-year course. Suppose that she wants to purchase a car immediately after graduating from college which will cost P750,000. How much should she invest at the end of every year in an investment fund that earns 9% annually to have enough money to buy the car upon graduation? 2. Mr. Dalisay applied for a bank loan with a principal of P150,000 to be paid after five years in order to purchase a vehicle. He negotiated for the stated rate of the loan at 6% wherein the current market rate is 10%.
aa.3 Your daughter is born today and you want her to have $1.5 million dollars by the time she is 35 years old. You open an investment account that promises to pay 8% per year. How much money must you deposit each year, starting on her 1st birthday and ending on her 35th birthday, so your daughter will have $1,500,000 at age 35?
Task 3: Answer the following: a. Waleed wants to find out the annual rate of interest, will a principal RO 275 to amount to RO 9275 in 19 years? b. Saif is planning to buy a house in 19 years. He wants to invest RO 275 now and hopes to have RO 9275 to spend on the house when he buys it. What kind of interest rate would he need if his investment is compounded monthly? c. By using Excel, solve the following: (Note provide a screenshot of your work) If you have R.O. 9275 and you want to make a small business that will provide you a steady income for 19 year. Currently, banks are paying 19% compound interest on the annual basis. How much would you be able to receive at the end of each year?
Question a Tori is planning to buy a car. The maximum payment she can make is $3400 per year, and she can get a car loan at her credit union for 7.3%interest. Assume her payments will be made at the end of each year 1–4. If Tori’s old car can be traded in for $3325, which is her down payment, what is the most expensive car she can purchase? Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this lin
Question 1 Michelle Smith is planning on taking her family to Disney World in three (3) years’ time. She plans on saving $20,000 each month for the next three (3) years. How much money will she accumulate at the end of that period if interest is 12% per annum? Angela is planning for her daughter’s university education in seven (7) years’ time. She estimated that the university education will cost $1,955,000. How much should she invest each year for the next seven (7) years to achieve this goal if interest rate is 15%? Mr. James would like an income of $300,000 per year in equal instalments for fifteen (15) years. How much should he invest in order to obtain this income if the interest rate is 20% compounded annually? You expect to deposit the following cash flows at the end of years one (1) through to five (5), $1, 000, $4, 000, $9, 000, $5, 000 and $2, 000 respectively. What is the future value at the end of year six (6) if you can earn 10% compounded annually?…
Q2.2: Since the birth of his granddaughter, 15 years ago, Michael has deposited $150 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 3.75% compounded monthly for the first 8 years and 4.25% compounded monthly for the next 7 years. a. What was the accumulated value of the RESP at the end of 8 years? b. What was the accumulated value of the RESP at the end of 15 years? c. What was the amount of interest earned over the 15-year period? Kindly keep all the decimals for all the preocedures, DO NOT ROUND
Question 1 To pay for her college education, Gina is saving $2,000 at the beginning of each year for the next eight years in a bank account paying 12 percent interest. How much will Gina have in that account at the end of 8th year?