A retirement account has $260,000.00 that will be used to start an annuity that earns 4.1%, compounded monthly. The annuity will make payments monthly in the amount of $1,500.00. How long will it be until the annuity has a balance of $0?

A retirement account has $260,000.00 that will be used to start an annuity that earns 4.1%, compounded monthly. The annuity will make payments monthly in the amount of $1,500.00. How long will it be until the annuity has a balance of $0?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 1P

See similar textbooks

Related questions

Q: Acme Annuities recently offered an annuity that pays 4.5% compounded monthly. What equal monthly…

A: Annuities are financial products that are sold by the financial institutions (like insurance…

Q: you have a 12-year annuity paying $496 quarterly in 10 years when interest is 6.65% compounded…

A: Number of annuity payments = Number of years * time period of Payment = Number of years * Quaterly…

Q: A personal account earmarked as a retirement supplement contains $242,100. Suppose $200,000 is used…

A: Annuity is the regular deposit of payments in saving account, for mortgage payments, for insurance…

Q: Find the amount of an annuity that consists of 20 quarterly payments of $700 each into an account…

A: The future value function or concept can be used to determine the future value of a present sum or…

Q: A personal account earmarked as a retirement supplement contains $242,200. Suppose $200,000 is used…

A: Compound interest (or compounding interest) is the interest on a loan or deposit calculated based on…

Q: A 10-year annuity pays $1,725 per month, and payments are made at the end of each month. The…

A: The current worth of the cash flows or an asset after discounting is termed as the present value.

Q: n annuity pays $4152 per month, and payments are made at the end of each month. If the interest rate…

A: Present value of annuity can calculated by using Excel PV function.

Q: Construct the Annuity Savings Model that satisfies: (a) The initial balance is $800, and each month…

A: Annuity Savings Model Balance at end of month = [Balance at beginning of month T-1 * (1+Interest%) +…

Q: Assume that you make monthly payments of $ 625 into an ordinary annuity paying 4% compounded…

Q: If you make monthly deposits of $301.00 into an ordinary annuity earning 3.32% compounded monthly,…

A: Interest refers to the cost of money borrowed from a lender. It can be simple or compound. It is…

Q: A certain annuity pays 80.00 at the end of every 3 months. If the present value of the annuity is…

A: Periodic annuity payment (A) = 80 Payment frequency = quarterly Let r = Quarterly rate n = Total…

Q: An annuity with a cash value of $12,000 pays $2,050 at the beginning of every six months. The…

A: Annuity: An annuity is the series of payments which is received or paid for a certain period of…

Q: If you want to be paid from a 14 year ordinary annuity with a guaranteed rate of 2.208% compounded…

A: In finance, the term annuity represents a sequence of cash flows that contain a fixed payment at…

Q: A personal account earmarked as a retirement supplement contains $242,300. Suppose $200,000 is used…

A: The interest rate is 6%, compounded quarterly. The interest rate per quarter will be (6%/4) = 1.5%.…

Q: A 16-year annuity pays $1,900 per month, and payments are made at the end of each month. The…

A: The question is based on the concept of present value of future annuity payments . Annuity payments…

Q: An annuity with a cash value of $9,800 pays $880 at the beginning of every three months. The…

A: a) No. of payment =12.08 or 13 b) size of final annuity payment = $880

Q: A 20-year annuity pays $1,950 per month, and payments are made at the end of each month. If the…

A: Present value of the annuity of $1950 at 7% compounded monthly at the end of 10 years would be…

Q: A personal account earmarked as a retirement supplement contains $242,300. Suppose $200,000 is used…

A: Calculation of the number of quarters until the balance of the account is $0 is as follows: Hence,…

Q: If 5 deposits of $600 each are made into an account at the end of years 9, 10, 11, 12, and 13, what…

A: Deposit in year 9,10,11,12 and 13 = $ 600 Future value period = Year 25 Annual interest rate = 12%

Q: If you make monthly deposits of $378.00 into an ordinary annuity earning 3.26% compounded monthly,…

A: Using the NPER function in excel

Q: Compare the two given annuity situations below. What conclusion can you draw from the information,…

A: The future value can be resulted on two bases: Regular annuity series payment or lump sum payment.…

Q: certain annuity pays 80.00 at the end of every 3

A: The nominal rate can be computed as follows :

Q: How much money is needed now to establish a perpetuity that pays $2,000 at the end of every quarter…

A: given information perpetuity that pays at the end of every quarter = $2000 interest rate = 2.5% =…

Q: If $75,000 is used to purchase an annuity that pays $950 a month, and if the interest rate is 9%…

A: Price of Annuity = 75,000 Monthly Compounding Annuity Payment per month = 950 Interest Rate = 9%/12…

Q: How much should be deposited into an account to set up an annuitv that will provide equal payments…

A: Present Value: Given a certain rate of return, the present value (PV) of a future amount of money or…

Q: Acme Annuities recently offered an annuity that pays 3.6% compounded monthly. What equal monthly…

A: Each period payment is considered as PMT.

Q: annuity offers to pay you $1,000 per quarter for 20 years. If you want to earn a rate of return of…

A: Answer: Calculation of the maximum amount that you are willing to pay as a lump sum today to obtain…

Q: A personal account earmarked as a retirement supplement contains $292,100. Suppose $250,000 is used…

A: We use NPER function to calculate no of quarters

Q: A personal account earmarked as a retirement supplement contains $292,200. Suppose $250,000 is used…

A: Let the required annuity be = n quarters To make the account 0 at the end of the annuity period, the…

Q: An annuity with a cash value of $12,000 pays $880 at the beginning of every three months. The…

A: Annuity refers to series of annual payment which is paid or received at start or ending of specific…

Q: Acme Annuities recently offered an annuity that pays 5.4% compounded monthly. What equal monthly…

A: The monthly payment required to reach the target can be calculated with the help of future value of…

Q: Assume that you make monthly payments of $ 475 into an ordinary annuity paying 8% compounded…

A: Future value of ordinary annuity formula is: Future value of ordinary annuity is calculated by…

Q: What is the value of a 30-year annuity that pays $2500 a year? The annuity’s first payment will be…

A: As a fist step, let's shifts ourselves to the end of t = 10 years.Annuity, A = $ 2,500; n = number…

Q: A personal account earmarked as a retirement supplement contains $342,400. Suppose $300,000 is used…

A: Given data; annuity = $300,000 interest rate = 6% compounded quarterly payment amount = $6500…

Q: Assume that you make monthly payments of $ 675 into an ordinary annuity paying 6% compounded…

A: The amount after 12 years can be calculated as future value of annuity

Q: A certain annuity pays $108 at the end of every 3 months. If the present value of the annuity is…

A: Annuity means a set of a finite number of payments that are made in equal time intervals and the…

Q: A retirement account has $220,000.00 that will be used to start an annuity that earns 4.5%,…

A: The calculation is:

Q: If you have a 13-year annuity paying $305 quarterly in 5 years when interest is 3.25% compounded…

A: Time Period = 13 Years Monthly Payment made at beginning = $305 Payment started in 5 years…

Q: American General offers a 16-year annuity with a guaranteed rate of 6.07% compounded annually. How…

A: Given Information Annual amount = $2000 Annual interest rate = 6.07% Number of years = 16

Q: Recently, More Money 4U offered an annuity that pays 5.4 % compounded monthly. If $1,634 is…

A: Computation of future value and interest earned:

Q: A 13-year annuity pays $1,400 per month, and payments are made at the end of each month. The…

A: The Present value of annuity can be calculated using PVfunction in excel.It can be divided into 2…

Q: A personal account earmarked as a retirement supplement contains $292,200. Suppose $250,000 is used…

A: The concept of the time value of money states that the current worth of money is more than its value…

Q: A personal account earmarked as a retirement supplement contains $342,200. Suppose $300,000 is used…

A: Given data; Payment amount = $5500 annuity amount = $300,000 annual interest rate = 5% As the…

Q: Acme Annuities recently offered an annuity that pays 6.0% compounded monthly. What equal monthly…

A: The future value of the annuity is the future worth of a series of cash flows at a certain rate of…

Q: If you make monthly deposits of $378.00 into an ordinary annuity earning 3.26% compounded monthly,…

A: Monthly Deposit (PMT) = $378 Interest Rate (r) = 3.26%/12 =0.27166667% Amount after n number of…

Question

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 by step

Solved in 2 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, accounting and related others by exploring similar questions and additional content below.

Similar questions

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.
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?
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?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?