An aunt gifts you with $12,000, but only after you invest it for one year. She gives you two choices. 1. Invest the entire sum at 4.2% compounded monthly. 2. Invest $1000 at 7.1% each month in an annuity that pays every month. (a) What is the future value of the money invested with method 1? (b) How much interest is earned with method 1? (c) What is the future value of the money invested with method 2? (d) How much interest is earned with method 2? (e) Which method would you choose?

Q: Roger decides to start an investment account by depositing $5,000 today. In one year he will invest…

A: Initial deposit (Year 0) = $5,000 Year 1 Deposit = $500 Year 2 Deposit = $600 Year 3 Deposit = $700…

Q: Muaz will need $130,000 in 4 years to buy a piece of property. He plans to save money by making…

A:

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A: An annuity is a financial arrangement that involves a series of fixed payments at equal time…

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A: The interest earned on the annuity can be calculated with the help of future value of annuity…

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

Q: Roger Baker has accumulated $775,000 in his RRSP and is going to purchase a 20-year annuity from…

A: An Annuity is simply a fixed amount which will be received by Roger Baker at every month-end Present…

Q: Art wants to know how much he'll have to invest today to receive an annuity of $8,000 for three…

A: The computation of amount of investment is as follows:The investment needed today is the present…

Q: Dean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He…

A: Payout annuity is the amount that an investor receives at a regular interval after a certain period…

Q: Ms. Perez wants to invest in a savings account with interest rate of 9% per year. She decided to…

A: Present value of annuity is the current value of the future payments that are calculated using the…

Q: Your uncle is about to retire, and he wants to buy an annuity that will provide him with $7,000 of…

A: Annual income (C) = $ 7000 Number of annual payments (n) = 21 Annual interest rate (r) = 5.25%

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Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Yearly annual income = $15,000 Interest rate = 4%   NOTE: As per our…

Q: An individual wants to have 1,000,000 AED in 10 years. Suppose she will pay no taxes at the end of…

A: To calculate the present value , the future value need to be discounted using the discount rate.…

Q: An investor requires an annual (year-end) income of $15,000 in perpetuity. Assuming a fixed rate of…

A: Information Provided: Annual income = $15,000 Interest rate = 4%   NOTE: As per our policy, we…

Q: A rich aunt has promised you $4,000 one year from today. In addition, each year after that, she has…

A: Payment after one year = $ 4,000 Annual growth rate in payments = 3% Number of payments = 20…

Q: you have a chance to buy an annuity that pays $1,000 at the end of each year for 5 years. You could…

A: The most we should pay for the annuity is nothing but the present value of annuity. Therefore, In…

Q: In the following ordinary annuity, the interest is compounded with each payment, and the payment is…

A: It can be solved using NPER function in excel. =NPER(rate,pmt,pv,[fv],[type]) Rate The interest…

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A: The annuity value at end of 14 years can be calculated as future value of annuity.

Q: Without using Excel and using the formula, Cheryl is setting up a payout annuity and wishes to…

A: Present Value of annuity refers to the present value of all the future payments of and series of…

Q: For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the…

A: Given two alternatives are: Receiving $1500 after three years Receiving $3000 after five years…

Q: Dean Gooch is planning for his retirement, so he is setting up a payout annuity with his bank. He…

A: The annuity is a series of cash flow wherein an equal amount is paid every period.

Q: You have just received a windfall from an investment you made in a friend's business. She will be…

A: Present value shall be computed by discounting the cash flows at the required rate.  Future value…

Q: When you were born, your parents started to deposit monthly $2,000 in the bank. The bank offers a…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Suppose a woman has decided to retire as soon as she has saved $800,000. Her plan is to put $950…

A: Given: Future value =$800,000 Deposits per month = $950 Annual interest rate =2.4% So, monthly rate…

Q: A real estate investor feels that the cash flow from a property will enable her to pay a lender…

A: This is the problem of the time value of money wherein the interest rate is mentioned and gets…

Q: A man can sell his business for $800,000 cash or for $125,000 plus $12'I a. Find the present value…

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Q: Suppose a friend tells you about an annuity that pays 6% annual interest, compounded semi-annually.…

A: value of investment is Future value of periodic payments

Q: Boris wants to save $27,000.00 for the down payment on a house. He already has $2,700.00, and he…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: A.) A man has deposited $50 000 in a retirement income plan with a local bank. This bank pays 9% per…

A: The requirement is to find the annual withdrawal. This amount will be the same for all 12 years. The…

Q: Suppose you invest in an annuity that pays 5% interest, compounded semiannually. How much will you…

A: Formula used as follows: S=R1+in-1iS=Future valuei=Interest rate per periodn=Number of…

Q: 1.) Miller likes to invest in annuity that will pay him Php. 5000 at the end of each month for 5…

A: Note : As per the guidelines, only first question will be answered. Kindly post the second question…

Q: Assume that you just inherited an annuity that Will pay you 10,000 per year, with the first payment…

A: Present value of perpetuity = Annuity amount /rate of return  60,000 = 10,000 / rate of return  Rate…

Q: An investor deposits $100 into his credit union account that pays interest at the rate of 3.25% per…

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A: Present value: The money having at present has more value than receivable in future. Formula: FV =…

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A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: It is estimated that you will pay about $80,000 into the Social Security system (FICA) over your…

A: The future value is the value of the equal deposits at the end of the deposit period. The…

Q: An individual wants to have 1,000,000 AED in 10 years. Suppose she will pay no taxes at the end of…

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Q: Your aunt is planning to invest in a bank CD that will pay 7.5% interest semi annually. If she has…

A: SEMI ANNUAL INTEREST RATE  (7.50%/2) 3.75% PERIOD (4*2) 8 PRESENT VALUE $5,000 PMT 0

Q: If money is worth 5% compounded quarterly , find the future worth of a sequence of 12 semi annual…

A: Since you have asked multiple questions, we will solve the first question for you as per policy.…

Q: TVM calculator, compare the following if the investment pays 7%/a compound annually and payments are…

A: Future value of investment include the compound interest and payment made for the future.

Q: Aunt Zelda’s son starts college in 5 years for which she will need $15,000 payable at the end of…

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Q: Suppose that, to purchase a car, you are obtaining a personal loan from your uncle in the amount of…

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A: Time has been precious in all perspectives, however in terms of finance, time has a monetary value.…

Q: You plan to buy an apartment for $300,000, but you have only $8,000 in cash. The bank will  loan you…

A: Time value of money is considered to determine the equated instalments that are due for each period.

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A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…