interest rate, how much will she have saved for their trip if the interest is compounded in each of the following ways? a. Annually b. Quarterly c. Monthly
interest rate, how much will she have saved for their trip if the interest is compounded in each of the following ways? a. Annually b. Quarterly c. Monthly
Chapter15: Choice Of Business Entity—other Considerations
Section: Chapter Questions
Problem 76P
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The following tutorial questions serve as practice questions on TVM and
- Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 5 years. She will have enough to pay for the trip if she invests $5,000 per year until that anniversary and plans to make her first $5,000 investment on their first anniversary. Assume her investment earns a 4 percent interest rate, how much will she have saved for their trip if the interest is compounded in each of the following ways?
a. Annually b. Quarterly c. Monthly
2. Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows:
Years 1 – 3 $15,000 each year
Year 4 to 6 $10,000 each year
Year 7 $25,000
Interest on the fund is 5%.
a. What is the present worth of this inheritance?
b. Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
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Future Value
VIEWA) $28,165 of amount saved by end of 5th Anniversary by Maryann when interest compounded annually
VIEWB) $28,215 of amount saved by end of 5th Anniversary by Maryann when interest compounded quarterly
VIEWC) $28,227 of amount saved by end of 5th Anniversary by Maryann when interest compounded monthly
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