Rhonda has saved $1,200,000 in an account. Her goal is to have 1,500,000 saved up to use as down payment on a house in the next 5 years. If her money is sitting in an account earning 2.50% per year, would Rhonda be able to meet her goal of $1,500,000 in 5 years?

Rhonda has saved $1,200,000 in an account. Her goal is to have 1,500,000 saved up to use as down payment on a house in the next 5 years. If her money is sitting in an account earning 2.50% per year, would Rhonda be able to meet her goal of $1,500,000 in 5 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 35P

See similar textbooks

Related questions

Q: Mike Williams, a well-known real estate appraiser, just paid $390,000 for an insurance policy that…

A: Perpetuity amount= $390,000 Cash Flow Amount= $14,600 per year Rate of return=?

Q: Marie, an employee at McCormick, has determined that she will need $5500 per month in retirement…

A: An annuity is a series of cash flows with an equal amount occurring at equal time intervals for a…

Q: Mary Kate, Ashley, Dakota, and Elle each want to buy a new home. Each needs to save enough to make a…

Q: Your great - uncle Claude is 82 years old . Over the years , he has accumulated savings of $ 80,000…

A: Investor will deposit his savings and draws equal annual amounts for next 10 years. The equal annual…

Q: Magdalena, age 35, has $72,000 accumulated in savings. She projects she will save $23,000 a year…

A: The amount you can put back or invest each period, as well as the interest you earn on your savings,…

Q: If money is worth 5% compounded quarterly, how much must Cristina save every end of three months to…

A: Money save in every quarter can be calculated using the formula of future value of annuity.

Q: Krystal plans to save $500 at the end of Year 1, $600 at the end of Year 2, and $700 at the end of…

A: Money she will save by end of year 3 is future value of all yearly payments

Q: A father is now planning a savings program to put his daughter through college. She is 13, plans to…

Q: Hannah wants to have $ 4500 to help pay for a new deck in 7 years. If she wants to put her money…

A: FV = PV * e^(rt)

Q: James wants to buy a car in 5 years. The car is expected to cost $30,000 at that time. How much…

A: The amount required to invest today can be calculated as the present value of lump sum

Q: Michelle is attending college and has a part-time job. Once she finishes college, Michelle would…

A: The value of any current asset, depending on the assumed rate of growth, at a future date is called…

Q: Dreya and Fred bought a $225,000 house. They made a 10% down payment and financed the rest at an APR…

A: APR: The Annual Percentage Rate (APR) is the total cost of a loan to a borrower, including fees. The…

Q: Susan Orman wants to pay $1500 semiannually to her granddaughter for 10 years for helping her around…

Q: Your great-uncle Claude is 82 years old. Over the years, he has accumulated savings of $80,000. He…

A: Here we can use the concept of annuities. In finance annuities is a series of payments/receipts that…

Q: . Holly wants to have $200,000 to send a recently born child to college. She sets up a 529 plan…

A: The question is based on the concept of time value of money with annuity payment , used the equation…

Q: A father is now planning a savings program to put his daughter through college. She is 13, plans to…

A: Required: Compute the value of annual deposits to be made by the father so that college expenses can…

Q: Carol wants to have $500,000 when she retired in 25 years. Her credit union has an ordinary annuity…

A: GIVEN, FV = $500,000 N=25 M=12 R=4%

Q: Currently, Ally Gator has saved $15,000 in her retirement account. Ally plans on saving $6000…

A: The present value of cash flows presents the discounting value of future cash flows that arises in…

Q: Stuart Daniels estimates that he will need $26,000 to set up a small business in 7 years. How much…

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

Q: Katy has decided she wants to put money aside for a $8000 downpayment on a house. She figures she…

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

Q: What is the expected cost of college in each of the 4 years?

A: Future value or the expected value of a college can be found out by multiplying the interest rate…

Q: Colin thinks he can reasonably expect to buy a house in five years. He would like to have…

A: Calculation of investment (P):Answer:The amount of investment that Colin has to invest annually is…

Q: Sarah wants to have $20,000 in nine years. If she puts the money in an account which pays 4%…

A: For solving we have to calculate present value of future value considering compounding monthly…

Q: Skye plans to attend a 4-year public university. She will receive $4,300 in scholarships and grants…

A: Savings refers to the disposable income which is left by incurring all expenses. In order to…

Q: Kayla wants $7,000 saved in 4 years to make a down payment on a house. How much money should she…

A: Amount that needs to be invested now to meet her goal = 5795.20

Q: Lily has an account that pays 3.48% simple interest per year and wants to accumulate $4,000 in…

A: Interest per year can be calculated as: = Principal * Rate * Time

Q: Sarah N. Dippity believes the world will end in exactly five years. She has $400,000 in a bank…

A: Value in the account today $400,000. Withdrawals of “P” for 5 years and $50,000 at the end of 5…

Q: Rhonda has saved $ 1,200,000 in an account . Her goal is to have 1.500.000 saved up to use payment…

A: In order to calculate the future value, a company must be compounding the present value on specific…

Q: Mary decided to begin saving towards the purchase of a new car in 5 years. If Mary put $500 at the…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: Baby boomers can save up to $24,000 per year in a 401(k) account. If Eileen’s starting balance at…

A: Given information: Balance at time 0 = $200,000 Annual savings = $24,000 Interest rate = 7%

Q: sandra and cindy both invest $14,000 into savings accounts that earn simple interest if sandras…

A: Simple interest formula = A = P (1+rt) Where, A = Final amount i.e. Principal + Interest P =…

Q: A father is now planning a savings program to put his daughter through college. She is 13, plans to…

A: Inflation rate is the rate at which prices of goods and services increases over a period of time…

Q: Suzette is receiving $10,000 today, $15,000 one year from today, and $25,000 four years from today.…

A: GIVEN, PV0= $10,000 PV1= $15,000 PV4= $25,000 R= 9.6% N = 30

Q: Mrs. Jillian has just turned 16 years old and has her mind set on buying a new car by the time she…

A: Time value of money identifies the depreciation in value of money over the period of time by…

Q: Mr. and Mrs. Davis needs to have $100,000 to start their own catering business in 15 years. They…

A: Future value (FV) of the savings should be $100000.Number of years ( n ) of savings/investment is 15…

Q: How much money should she save at the beginning of each 3 months

A: Value at a future point of time is equal to sum of savings made and interest on those savings.…

Q: Delany wants $15,000 saved in 2 years to make a down payment on a house. How much money should she…

A: present value formula: present value=future value1+rmm×n where, r=interest rate m=frequency n=years

Q: Hannah wants to have $ 6500 to help pay for a new deck in 16 years. If she wants to put her money…

A: Future value required (FV) = $6500 Period of investment (n) = 16 Years Value of e = 2.7182818285…

Q: Tony wants to have $10,000 in 10 years after investing in an account that earns 4.6% compounded…

A: Future value is $10,000 Time period is 10years Interest rate is 4.6% Compounded monthly To find:…

Q: Holly wants to have $200,000 to send a recently born child to college. She sets up a 529 plan and…

A: Using excel PMT function

Q: Peter and Amy Chambers have saved $4,500. They are accumulating funds for a down payment on a…

A: If investment gives Simple Interest: Amount after 5 years = Principal + Interest for 5 years = 4500…

Q: Your great-uncle Claude is 82 years old. Over the years, he has accumulated savings of $80,000. He…

A: Given information: Present value $80,000 Number of years is 10 Interest rate is 10%

Q: Becca wants to save $900 per quarter for 3 years towards the purchase of an appliance. She feels…

A: Total number of quarters in 3 years = 4 quarters × 3 years = 12 quarters Thus, Becca will…

Q: Hannah wants to have $ 7500 to help pay for a new deck in 13 years. If she wants to put her money…

A: The amount required to invest today can be calculated with the help of future value function

Q: Sara has just graduated from college. She has determined that to purchase a home in 9 years she…

A: The amount of the annual annuity payment can be calculated using the below excel formula:

Q: Your great-aunt wants to help with your college graduation party. She has just placed $5,000 dollars…

A: Future value is the expected value of the current amount at a future date at a given rate of return.…

Q: A father is now planning a savings program to put hisdaughter through college. She is 13, plans to…

A: Given information: Annual cost is $12,000 Expected to increase by 6% annually Annual savings of…

Question

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, finance and related others by exploring similar questions and additional content below.

Similar questions

Rhonda has saved $ 1,200,000 in an account . Her goal is to have 1.500.000 saved up to use payment on a house in the next 5 years . If her money is sitting in an account eaming % per year Rhonda be able to meet her goal of $ 1,500,000 in 5 years ?
Patricia has $5,740 in a savings account earning 4.0% annually. She plans to use the money in the account to purchase a new car. If Patricia saves $3,280 a year at the end of the next 3 years, how much will she have in savings in 3 years to purchase a new car?
Jill will have reached her goal of saving $23,000 to buy a car if she puts away $420 a month in a 7% annual interest savings account for four years. Select one: True False
Rachel has a SMART goal to save for the next 7 years to purchase a $100,000 boat. She currently earns $125,000 a year. Her financial advisor believes that she can earn 4% APY on her account. If Rachel plans to save 10% of her monthly income every year, will that allow her to save enough for the boat in her time horizon?
amy just retired with savings of $8 million. If she expects to live for 43 years and to earn 9% a year on her savings, how much can she afford to spend each year (in $ dollars)? (Assume that you spend the money at the start of each year.)
Jennifer is planning a trip to Alaska in 5 years. She has calculated that she will need $15,000 to cover her expenses. Her bank offers money market investments at a rate of 4.5% compounded annually. What should Jennifer invest now to have the needed funds?
After several years of working, Katy has saved $125,000. If she invests that $125,000 in a savings fund that adds 4% each year, about how much will her savings account have after15 years? For this question, ignore compounding and taxes, and assume Katy does not put additional money into savings. A. 190,000 B. 185,000 C. 200,000 D. 175,000
Leon wants to save a classic car so he deposits $1500 at the end of the years into a savings account that pays her 6% compounded annually. What are those deposits worth at the end of 5 years ?