ohn wishes to make withdrawals of $250 at the end of each month for four years. The interest rate is 4% compounded semi-annually. The equivalent interest rate per monthly payment interval is: Select one: a. 2% b. 0.33% c. 3.3% d. 0.656%

ohn wishes to make withdrawals of $250 at the end of each month for four years. The interest rate is 4% compounded semi-annually. The equivalent interest rate per monthly payment interval is: Select one: a. 2% b. 0.33% c. 3.3% d. 0.656%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

See similar textbooks

Related questions

Q: Dylan deposits $10,000 now and makes an additional deposit of $5,000 at the end of Year 3 in the…

A: Interest charged on the principal amount and the interest accrued is known as Compound Interest. It…

Q: Daniel deposits $20,000 into an account earning interest at 6% per year compounded quarterly. He…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: Joe plans to deposit $300 at the end of each month into a bank account for a period of 3 yr, after…

A: To solve this question we have to first find the future value of monthly annuity of $ 300 after…

Q: James Kinchen has a 1-year ARM for $100,000 over a 30-year term. The margin is 2% and the index rate…

A: Compounding of interest means, interest is received on principal as well as the earned interest…

Q: One year from today you must make a payment of $4,000. To prepare for this payment,you plan to make…

A: Excel Spreadsheet: Excel Workings:

Q: You deposit $4,500 per year at the end of each of the next 25 years into an account that pays 10…

A: Given information: Annual deposit amount is $4,500 Annual interest rate is 10% Number of years is 25…

Q: in 8 years (a) What amount should he deposit at the end of each quarter at 6% compounded quarterly…

A: We need to use PMT formula to calculate quarterly payment. PMT =FV*i(1+i)n-1 where FV =future value…

Q: Hamilton wants to accumulate ₺ 24.000 at the end of 4 years. It starts quarterly payments in a bank…

A: Amount at the end of 4 years = 24000 Total Terms(n) = 4*4 = 16 quarters Anbuak rate =6% Quarterly…

Q: You deposit $24,000.00 in an account that pays 6% compounded quarterly and immediately start making…

A: In this problem you have to find out present value FACTOR and find out quarterly deposits.

Q: he outstanding balance on Peter's credit card account is 3380 dollars. The bank issuing the credit…

A: Monthly payment(PMT) of a credit card amount can be calculated by using this equation PMT…

Q: You plan to make five deposits of $1,000 each, one every 6 months, with the first paymentbeing made…

Q: Gladys borrows ₱ 400,000.00 at an interest rate of 4% per year compounded semi- annually. She agreed…

A: Value after 2 years FV = PV* (1 + r / n)nt Where, PV = Present value FV = Future value r = Rate…

Q: Stephen deposited $1,200 at the end of every month into an RRSP for 8 years. The interest rate…

A: Amount deposited at the end of every month is $1200 Time period is 8 years Interest rate for first…

Q: John borrows $50,000 at an annual effective rate of 6% and will make payments 3. at the end of each…

A: The balance after the 10th loan payment can be ascertained by computing the future value at the end…

Q: Pamela borrows $2500 at 12% per annum simple interest for 2 years. In addition, a few of $200 is…

A: Simple interest refers to the simplest method of calculating the financier charges applied on the…

Q: You deposit $201 at the end of each quarter into an account that pays a nominal annual rate of 16%…

A: The account value at end of 15 years can be calculated with the help of future value of annuity…

Q: You place £1,000 on deposit at an annual interest rate of 10% and make regular contributions of £250…

A: Solution:- When an amount is deposited somewhere, it earns interest on it. The amount initially…

Q: MARIA LOANED AN AMOUNT OF P100,00.00 PAYABLE IN 15 EQUAL QUARTERLY INSTALLMENTS THE FIRST PAYMENT…

A: Loan Amount = P100,000 Time Period = 15 Quarters Interest Rate = 10% compounded bi-monthly

Q: Velma deposits $2,534 at the end of each quarter, increasing the deposit by $147 per quarter. How…

A: The timing of cash flow is taken into account by discounting them. This is partly due to the effect…

Q: Anthony plans to deposit $500,000 now and $10,000 every 6 months for 5 years into an account.…

A: Deposit now (D) = $500000 Semiannual deposit (A) = $10000 n = 5 years = 10 semiannual deposits…

Q: If Jackson deposits $120 at the end of each month in a savings account earning interest at a rate of…

A: To solve this question we have to use the formula of Future Value of ordinary annuity. The formula…

Q: You wish to have $400,000 at the end of twenty-five years. In the last ten years, you contribute…

A: In this question one has to find the present value of the investment. The future value is given as…

Q: Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2…

A: We need to use present value formula to calculate required deposit now. The equation is PV =FV(1+i)n…

Q: Sam Salverri is planning to retire in 15 years. Money can be deposited by 8% compounded quarterly.…

A: Convert 8% compounded quarterly to its equivalent interest rate for monthly interval. Here, 'R'…

Q: What is the value of the account at the end of 9 years?

A: Depositing equal amounts at the end of the period for a fixed time period is in the form of an…

Q: You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end…

A: Data given:: No. of deposits = 24 Amount deposited at the beginning of each month = $500 FV= $12800…

Q: Mason owes $6,700 on his credit card. The bank charges an annual interest rate of 12%, compounded…

A: Amount owes by Mason $6,700 Interest Rate (12% /12) 1% Period 13

Q: Daniel deposits $20,000 into an account earning interest at 6% per year compounded monthly. He…

A: Information Provided: Initial deposit = $20,000 Interest = 6% compounded monthly Withdrawal = $1200…

Q: $400 is deposited at the end of each month for eight years. For the first five years, the rate is 3%…

A: Deposit : 400 End of each month Total Time Period = 8 years * 12 = 96 months Interest Rate for first…

Q: At the end of each quarter, Patti deposits $1,600 into an account that pays 12% interest compounded…

A: Deposit amount = $1600 Interest = 12% Compounding = Quarterly Quarterly interest rate = 12%/4 = 3%…

Q: A loan of $27900 is repaid by payments of $675 at the end of every quarter. Interest is 4%…

A: Given: Particulars Amount Loan(PV) $27,900 Payment(PMT) $675 Quarters 4 Interest rate 4%

Q: You deposit $35,000.00 in an account that pays 6% compounded quarterly and immediately start making…

A: Amount Deposited = $ 35,000 Rate of Interest = 6% compounded quarterly

Q: You wish to have $200,000 at the end of twenty years. In the last five years, you withdraw $1,000…

A: Solution- FV at the end of 20 years required =$200000Amount of withdrawal at the end of 5…

Q: Six months from today, you wish to begin making an infinite series of semiannual withdrawals of $600…

A: An infinite series of deposit which will have same deposit is known as perpetuity. The present value…

Q: Tedros borrowed $2 million and planned to repay the loan by making equal month-end payments over a…

Q: Maria loaned an amount of 100,000 in payable in 15 equals installments. The first payment was made a…

A: The present value of loan is equal to the present value of all the future installments discounted at…

Q: You make deposits of $700 at the end of each month into an account earning i^(12) = .03 for three…

A: As per the time value of money, a dollar is worth more today than the same dollar in the future.…

Q: An uncle has deposited $10,000 into an account that is paid quarterly at an annual rate of 2%. The…

A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…

Q: Stan Moneymaker has a bank loan for $10,000 to pay for his new truck. Thisloan is to be repaid in…

A: Each time a person makes a payment on a loan he pays some interest along with a part of the…

Q: Beatrice deposits $75 at the end of each month into an account earning 4.75% compounded monthly. How…

A: Compound interest refers to the interest accrued not only on principal amount but also on the…

Q: Sam Salverri is planning to retire in 15 years. Money can be deposited by 8% compounded quarterly.…

A: in this we have to calculate monthly interest rate and from that we can get required value.

Q: Mr. Bean wants to borrow $9,100 for three years. The interest rate is 7.1% compounded monthly. a.…

A: Installment loan is the debt which is discharged by making annuity payments consisting of two…

Q: Mr. Nina borrows $425,000 from the bank at 3.5% per year interest over a 30-year period. He can make…

A: Amount borrowed = $425000 Interest rate = 3.5% Period = 30 years Monthly payment = $1400

Q: Alan borrows $100,000 at nominal interest rate 9% per annum which matures in 5 years. Repayments are…

A: Standard Disclaimers: “Since you have posted a question with multiple subparts, we will solve the…

Question

John wishes to make withdrawals of $250 at the end of each month for four years. The interest rate is 4% compounded semi-annually. The equivalent interest rate per monthly payment interval is:

Select one:

a. 2%

b. 0.33%

c. 3.3%

d. 0.656%

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

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

Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
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?
Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Stanley have to pay in five years? How much will he have to pay at maturity if hes required to make annual interest payments at the end of each year?
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
Cash Flow Amounts R. Lee Rouse borrows 10,000 that is to be repaid in 24 equal monthly installments payable at the end of each subsequent month with interest at the rate of 1% per month. Required: Using the appropriate table, calculate the equal installments.
Next Level Potter wishes to deposit a sum that at 12% interest, compounded semiannually, will permit 2 withdrawals: 40,000 at the end of 4 years and 50,000 at the end of 10 years. Analyze the problem to determine the required deposit, stating the procedure to follow and the tables to use in developing the solution.