A recent television commercial made the statement that if a person invests $750 at the beginning of each month for 35 years, they could have $1,000,000 for retirement. Assuming monthly compounding, what annual interest rate is implied in this statement?

A recent television commercial made the statement that if a person invests $750 at the beginning of each month for 35 years, they could have $1,000,000 for retirement. Assuming monthly compounding, what annual interest rate is implied in this statement?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 12E

See similar textbooks

Related questions

Q: An engineer who is about to retire has accumulated $50 000 in a savings account that pays 6% per…

A: Present Value of Ordinary Annuity refers to the concept which dictates the discounted value of a sum…

Q: What is the future value of $2,500 deposited at the end of each quarter year for 15 years earning 8%…

A: In the given question we need to compute the future value of $2500 deposited at the end of each…

Q: What is the future worth of a series of equal yearly deposits of $6,000 for 6 years in a savings…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: A small business owner contributes $4,000 at the end of each quarter to a retirement account that…

A: FV is the future worth of cash flows that have occurred in the past or present.

Q: Sixty monthly deposits are made into an account paying 6% nominal interest compounded monthly. What…

A: "Hi, Thanks for the Question, Since you asked multiple sub parts, we will answer first three sub…

Q: If money is worth 8% annually, what annual payment is required to raise ₱ 18,811 after 2 years if…

A: Future Value of Annuity Due = (1 + r) x P x [{(1 + r)^n} - 1] / r

Q: You invested $10,000 on February 8, 2021, in an account that pays 4% compounded monthly. If simple…

A: In case of partial period calculation and when compounding monthly, number of complete months taken…

Q: To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate…

A: The future value of an annuity is the worth of a series of recurrent payments at a future date,…

Q: How much (in $) would the account be worth after 10 years?

A: Note: Since you have posted a question with multiple sub-parts, we will solve the first three…

Q: An engineer has received $10 000 from his employer for a patent disclosure. He has decided to invest…

A: Final value is computed in nominal terms as the compounded value of the initial investment. The…

Q: You are offered the opportunity to put some money away for retirement. You will receive 10 annual…

A: Annual payment “PMT” = 5000 Number of payments “n” = 10 Interest rate = 12% compounded monthly…

Q: Most people prepare for retirement by depositing money into a monthly or annual savings plan. An…

A: An annuity is a stream of equivalent periodic cash flows over a specific time duration. The future…

Q: As part of your retirement plan, you have decided to deposit $9,000 at the beginning of each year…

A: Note:- “Since you have asked multiple questions, we will solve the first question for you. If you…

Q: Assume you put $400 per month into a retirement account for 14 years, and the account has an APR of…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: You plan to prepare for retirement by making monthly contributions $1,500 to a savings account that…

A: Accumulated savings is defined as the savings, which amount for putting the back or investment each…

Q: Columbia Corporation deposited $2,000 in an account that pays 12% interest annually. If the interest…

A: Continuous compounding of an amount of $2,000 at an interest rate of 12% and for a period of 20…

Q: Suppose are going to make monthly deposits into an account with an annual interest rate of [8] 2.5%…

A: For calculating the monthly deposit as ordinary annuity; the $1,000,000 amount shall be taken as the…

Q: An accountant is entitled to received 35,000 pesos at the beginning of each year for 18 years. What…

A: The present value means the present value of the payment of the future. It generally tells us what…

Q: A company wants to have $40,000 at the beginning of each 6-month period for the next 4.5 years. If…

A: The given problem is on Annuity due Annuity due is an annuity whose payment is due immediately at…

Q: Assume that today is the first day of the month and that it is also your first day of retirement.…

A: The question is based on the concept of periodic payment as annuity payment Formula as,…

Q: As part of your retirement plan, you have decided to deposit $6,000 at the beginning of each year…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: You are expecting to retire in 28-years and you want to retire with $10,000,000. How much you must…

A: Given information: Future value is $10,000,000 Present value is $122,000 Number of years is 28…

Q: A man is planning to retire in 20 years. He can deposit money for his retirement at 8% compounded…

Q: 1. An employee plans on working and contributing to his retirement account monthly for 30 years and…

A: According to the rule, because you have posted multiple questions, we will answer the first question…

Q: A man is planning to retire in 20 years. He can deposit money for his retirement at 8% compounded…

A: Answer: Nominal interest rate = 8% Inflation = 3% Real interest rate = (1.08)(1.03)-1 = 4.85%…

Q: The Taylors have purchased a $200,000 house. They made an initial down payment of $10,000 and…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: What is the accumulated amount of a 8-year annuity paying ₱ 4,300at the end of each year, with…

A: Using excel FV function

Q: Suppose that you’d like to retire in 40 years and you want to have a future value of $ 1000000 in a…

A: Annuity(monthly instalment) is calculated by annuity from future value formula: Annuity from future…

Q: please answer with details on how to do it. Thank you. If a one-time amount of $10,000 is invested…

A: Future amount in case of compounding can be calculated as: = Principal * ( 1 + rate) ^ number of…

Q: In an effort to save money for early retirement, an environmental engineer plans to deposit $1200…

A: Given information: Monthly deposit of $1,200 for every 6 months Interest rate of 8% per year Number…

Q: How much can be accumulated for retirement if OMR2,000 is deposited annually, beginning one year…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: A civil engineer who is about to retire has accumulated 750 000 in a savings account that pays 6%…

A: The question is based on the concept of Financial Management. Annuity refers to the series of equal…

Q: What Annual payments will replace a monthly payment of at the start of each period for an insurance…

A: The future value of an annuity due is the future worth of a cash flow series paid/received at the…

Q: CNB, Inc. will deposit $25,000 into a money market account at the end of each year for the next…

A: Compound Amount= A=P(1+r)nt A= FInal amount P= Initial Investment r= interest rate t= No. of times…

Q: deposits

A: Introduction: The term annuity refers to series of payments which are made at intervals. Examples of…

Q: If his new interest rate is 5% per year compounded monthly, what will be his new monthly payment?

A: When a loan is borrowed by a person, It becomes his obligation to pay the installment amount every…

Q: Assume you put $400 per month into a retirement account for 14 years, and the account has an APR of…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: An investor pays $200 per month into a real estate investment that promises to pay an annual rate of…

A: COMPOUNDED MONTHLY C D RATE (8%/12) 0.66667% NPER (n) 5*12 PMT 200 PRESENT VALUE 0

Q: The Taylors have purchased a $160,000 house. They made an initial down payment of $30,000 and…

A: Given information: House purchased for $160,000 Down payment of $30,000 Interest rate is 11% Number…

Q: As part of your retirement plan, you have decided to deposit $6,000 at the beginning of each year…

A: Answer 1) Calculation of worth of account after 10 years if the annual rate of interest is 3% Amount…

Q: What is the future worth of a series of equal year-end deposits of $3,000 for 15 years in a savings…

A: Given in the question, Deposit (p v) = $3,000 Time = 15 years Interest = 9% We have to find the…

Q: a. You plan to invest $5,000 in an individual retirement arrangement today at a nominal annual…

A: Future value is the value of current asset or investment at a future date. Future value is…

Q: With an annual effective interest rate of 6%, 500 USD is deposited into an account at the end of…

A: we will be using time value of money concepts and formula for this calcualtion Time value of money…

Q: How much can be accumulated for retirement if $12,000 is deposited annually, beginning one year from…

A: Given information: Annual deposit amount is $12,000 Interest rate is 9% Number of years is 17

Question

A recent television commercial made the
statement that if a person invests $750 at
the beginning of each month for 35 years,
they could have $1,000,000 for retirement.
Assuming monthly compounding, what
annual interest rate is implied in this
statement?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Samuel Ames owes 20,000 to a friend. He wants to know how much he would have to pay if he paid the debt in 3 annual installments at the end of each year, which would include interest at 14%. Draw a time line for the problem. Indicate what table to use. Look up the table value and place it in a brief formula. Solve.
If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.
Next Level Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2 withdrawals: 40,000 at the end of 4 years and 50,000 at the end of 10 years. Analyze the problem to determine the required deposit, stating the procedure to follow and the tables to use in developing the solution.
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
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.
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)