Business

FinanceQ&A LibraryKaren owns a rental house in Ruston. Her policy requires the renter to make an initial deposit equal to the monthly payments which are $750. Whenever she receives her payments, she places the money into a savings account that has a 3.5% annual interest compounded monthly. Her renter gives the initial deposit on February 1, 2018. He pays on the first of the month every month for the next three years. How much will Karen’s savings be worth on February 1, 2021.Question

Asked Feb 5, 2020

1 views

Karen owns a rental house in Ruston. Her policy requires the renter to make an initial deposit equal to the monthly payments which are $750. Whenever she receives her payments, she places the money into a savings account that has a 3.5% annual interest compounded monthly. Her renter gives the initial deposit on February 1, 2018. He pays on the first of the month every month for the next three years. How much will Karen’s savings be worth on February 1, 2021.

Step 1

According to the information, the initial deposit is made on February 1, 2018 post which payments are made every month for $750 for the next 3 years, with a total payment periods of 37 ( 12*3 = 36 plus 1 initial deposit).

Step 2

Future value of annuity payments made of $750 for a period of 37 is calculated as below:

...Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: An 11.9 percent add on loan is to be repaid in monthly installments over three years. The total amo...

A: Computation of monthly payment:Hence, the monthly payment is $961.83

Q: TransITRI is a transportation company with a recent need of a new construction equipment at a first ...

A: The machine has a economic life of 8 years.The function given for cash flow before tax can be used t...

Q: What are the siginificance of financial ratios (i.e. current ratio; DSO; TATO; profit margin; ROA; R...

A: Financial ratios are relationships obtained from the financial ratios of a company.There are several...

Q: A firm incurs $70,000 in interest expenses each year. If the tax rate of the firm is 30%, what is th...

A: The below expression can be used to calculate after-tax interest expense:

Q: a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to ma...

A: Calculation of Current Bond Price and Yield to Maturity: Excel Spreadsheet:

Q: Could I Industries just paid a dividend of $1.10 per share. The dividends are expected to grow at a ...

A: Given that;Recent dividend is $1.10Expected growth rate of dividends for next 6 years is 20%Constant...

Q: What is unique about reporting current assets? Current assets are reported after they are converted...

A: Current assets can be exchanged for cash within a year.

Q: You can afford a $1350 per month mortgage payment. You've found a 30 year loan at 8% interest.a) How...

A: Part a-c:Calculation of Size of Loan, Total Money to be Paid and Total Interest:a) The size of loan ...

Q: What is Loco Inc's required rate of return if it has a beta of 0.82, that market risk premium of 4.7...

A: The below expression can be used to calculate the required return (without considering inflation):