An individual invests a series of level payments at the end of each quarter into a sinking fund, with no withdrawals allowed at the following annual levels: £1511 per annum for the first 8 years followed by £1971 per annum until the end of year 22 (inclusive). Assuming a nominal rate of interest of 6% pa convertible quarterly throughout the entire period, calculate, to 2 decimal places, the value of this investment at the time of withdrawal of t=31 years (correct answer = 133570.39, using formulas no tables)

An individual invests a series of level payments at the end of each quarter into a sinking fund, with no withdrawals allowed at the following annual levels: £1511 per annum for the first 8 years followed by £1971 per annum until the end of year 22 (inclusive). Assuming a nominal rate of interest of 6% pa convertible quarterly throughout the entire period, calculate, to 2 decimal places, the value of this investment at the time of withdrawal of t=31 years (correct answer = 133570.39, using formulas no tables)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 24P

See similar textbooks

Similar questions

A person invests a series of level payments at the end of each month into a sinking fund, with no withdrawals allowed over a 28-year period, at the following annual levels: £1655 per annum for the first 10 years followed by £2323 per annum until the end of year 20 (inclusive). Given that rate of interest is 5.9% pa convertible monthly throughout the entire period, calculate, the value of this investment at the time of withdrawal of t=28 years. no tables, only formulas, please
An company invests a series of level payments at the end of each month into a sinking fund, with no withdrawals allowed over a 25-year period, at the following annual levels: £1600 per annum for the first 11 years followed by £2132 per annum until the end of year 20 (inclusive). Assuming a rate of interest of 5.9% pa convertible monthly throughout the entire period, calculate, to 2 decimal places, the value of this investment at the time of withdrawal of t=25 years. No tables, only formulas, please
A company establishes a sinking fund to discharge a debt of $750,000 due in 8 years by making equal semiannual deposits, the first due in 6 months. If the investment pays 12%, compounded semiannually, what is the size of the deposits?
An investor pays the following separate amounts into a fund: £12,100 at t=7 years £17,900 at t=13 years £12,300 at t=28 years The fund pays an effective quarter-yearly rate of discount of 2.3% during the first 7 years and an effective half-yearly rate of interest of 4.9% for the remaining period until the end of year 28. Assuming that no withdrawals are to be made throughout the entire term of this investment, calculate the present value of the fund (i.e. at time t=0). ONLY formulas, please, no tables) answer is NOT 12607.61
An investor pays the following separate amounts into a fund: £12,000 at t=7 years, £17,000 at t=13 years, £12,000 at t=28 years The fund pays an effective quarter-yearly rate of discount of 2.3% during the first 7 years and an effective half-yearly rate of interest of 4.9% for the remaining period until the end of year 28. Assuming that no withdrawals are to be made throughout the entire term of this investment, calculate the present value of the fund
In order to meet a future liability in exactly 17 years time, a company plans to invest in a fund the following annuity payments: £3974 paid at the end of each quarter during the first 6 years followed by £5179 paid at the end of each 6 months until the end of year 17 (inclusive). Assuming an effective rate of interest of 2.9% per quarter-year throughout the entire 17-year period, calculate, to 2 decimal places, the total amount of fund the company will hold at the end of this investment period. (correct answer: 696906.98) (need working out)
Assuming the current zero rates (based on continuous compounding) for 6 months and nine months are 4% and 5% respectively. Assume further that a FRA was entered into several months ago that enables the holder to earn 6% (per annum based on quarterly compounding) for a 3-month period starting 6 months from now on a principal of $1,000,000. What is the value of the FRA to the person receiving funds?
Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 2.5 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses are 0.55 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 7 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual funds over the two-year investment period. Select one: a. 3.77% b. 5.09% c. 7.54% d. 8.86% e. 10.18%
The managers of a pension fund have invested $1.5 million in U.S. government certificates of deposit (CDs) that pay interest at the rate of 2.6%/year compounded semiannually over a period of 20 years. At the end of this period, how much will the investment be worth? (Round your answer to four decimal places.)
Mr. Deneau accumulated $98000 in an RRSP. He converted the RRSP into a RRIF and started to withdraw $5400 at the end of every three months from the fund. If interest is 4.1% compounded annually, for how long can Mr. Deneau make withdrawals? State your answer in years and months (from 0 to 11 months).
A manufacturing firm sets aside P50,000 at the end of each year for 5years in a sinking fund earning 12% interest compounded annually.Prepare a table showing the value of the deposits at the end each year forfive years.
What sinking fund payment is required at the end of each 6-month period, at 6% interest compounded semi-annually, to amount to P120,000 in 4 years?