solve the following showing all workings in microsoft word  It is now January 1, 2018 you plan to make deposits of $500 each, one every 6 months, with the first  payment being made today . if the bank pays a nominal interest rate of 12% but uses semi annual compounding, how much will be in your account  after 10 years?Billy Dilly started working with bns  as a sales rep and is tyring to catch up on having money for retirement. bns offers him a pension plan with an annuity thst is guaranteed to earn 7% interest compounded semi annually he paln to work for 10 years before retiring  and would like to draw an income of $90'000 per annum for 15 years. how much must be deposited per annum into his retirement fund to accomplish this

Question
Asked Oct 13, 2019
15 views

solve the following showing all workings in microsoft word  

It is now January 1, 2018 you plan to make deposits of $500 each, one every 6 months, with the first  payment being made today . if the bank pays a nominal interest rate of 12% but uses semi annual compounding, how much will be in your account  after 10 years?

Billy Dilly started working with bns  as a sales rep and is tyring to catch up on having money for retirement. bns offers him a pension plan with an annuity thst is guaranteed to earn 7% interest compounded semi annually he paln to work for 10 years before retiring  and would like to draw an income of $90'000 per annum for 15 years. how much must be deposited per annum into his retirement fund to accomplish this 

check_circle

Expert Answer

Step 1

Future value annuity due is a method used to calculate the total amount at the end of a period when payments are made at the beginning of the period. Since, here the first payment of $500 is made today with semi-annual interest rate of 6% (12%/2), we will use future value of annuity due formula as below

help_outline

Image Transcriptionclose

P(+7)-1]<(1+r) FVAD where FVAD Future value of annuity due P Payment made r =semi-annual interest rate number of periods n

fullscreen
Step 2

Putting values in the above equation:

help_outline

Image Transcriptionclose

500x[(1+0.06)30-1(1+0.06) FVAD 0.06 500x[(3.207135)-1]x1.06 0.06 500x 2.207135x1.06 0.06 =19496.3633378802

fullscreen
Step 3

Answer: There will be $19496.36 in the account at the end o...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Finance

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: 1. An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $3...

A: 1)Calculate the present and future value of an investment: Excel workings:

question_answer

Q: You are an analyst for a large public pension fund and you have been assigned the task of evaluating...

A: a.Calculate the expected rate of return for Manager Y as follows:

question_answer

Q: Present value with A= 25,000, r=10% compounded quarterly, t=5 years

A: Plese see the formula on the white board. The symbols have the same meaning as in the question; addi...

question_answer

Q: You expect to receive $25,000 at graduation in two years. You plan on investing it at 9 percent unti...

A: Let's say we have to wait for n years once you get the money at graduation, which itself is two year...

question_answer

Q: If the present value of an ordinary, 6-year annuity is $8,800 and interest rates are 9.5 percent, wh...

A: An annuity due is a type of annuity in which payments are made at regular time interval and at the b...

question_answer

Q: the effects of increasing the amount paid upfront when corporations make capital purchases with a fo...

A: Capital expenditure is an expense, that generates profits for a longer period of time which can be m...

question_answer

Q: Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 2% paid ...

A: Face Value of Bond = $1,000Coupon Rate = 2% or 0.02Inflation Rate = 10% or 0.10Time to Maturity = 1 ...

question_answer

Q: Byron Books Inc. recently reported $13 million of net income. ItsEBIT was $20.8 million, and its tax...

A: Calculate the earnings before tax (EBT) as follows:

question_answer

Q: Your coin collection contains 50 1952 silver dollars. Required: If your grandparents purchased them ...

A: Introduction:The value of collection is $26,595.04.Future value refers to value of an asset or the v...