Suppose you want to have $800,000 for retirement in 25 years. Your account earns 7% interest compounded annually. Round your answers to the nearest cent. a) How much would you need to deposit in the account each month? $ b) How much interest will you earn?

Suppose you want to have $800,000 for retirement in 25 years. Your account earns 7% interest compounded annually. Round your answers to the nearest cent. a) How much would you need to deposit in the account each month? $ b) How much interest will you earn?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 24P

See similar textbooks

Related questions

Q: Suppose you want to have $400,000 for retirement in 35 years. Your account earns 10% interest. How…

A: We can use the concept of time value of money. Here the monthly deposit is in the form of annuity…

Q: You deposit $100 each month into an account earning 6% interest compounded monthly. a) How much…

A: Future value refers to the amount worth in future time which is deposited today by an investor at…

Q: Suppose you want to have $500,000 for retirement in 25 years. Your account earns 6% interest. How…

A: The future value of an annuity is the future worth of a series of cash flows at a certain rate of…

Q: the bingo bank is paying 9% interest compounded monthly .a) if you deposit 1000 at the beginning of…

A: The future value of annuity due is the total future value of each cash flow which is made at the…

Q: You deposit $400 each month into an account earning 6% interest compounded monthly. How much will…

A: FV of annuity=P1+rn-1rwhere,P=Periodic paymentr=rate per periodn=number of periods

Q: What is the future value of $1,000 in five years at 8% interest paid semi annually ? Paid quarterly?…

A: Future value is an amount reccievable in future(after certain period) by investing today. Formula…

Q: Suppose you want to have $300,000 for retirement in 25 years. Your account earns 5% interest. How…

A: The monthly deposits to have $300,000 after 25 years, will be a form of an annuity as the same…

Q: Suppose you want to have $600,000 for retirement in 25 years. Your account earns 6% interest. How…

A: Using excel PMT function = PMT(rate,nper,pv,fv)

Q: You deposit $200 each month into an account earning 3% interest compounded monthly. a. How much will…

A: Time value tells that money received today by an individual has more value than that of receiving…

Q: You will need to deposit $_______ each quarter.

A: Future Value of Annuity: It is computed by compounding the present stream of annuity cash flows…

Q: how much money will be in the account? How much of it is interest?

A: Annuity payments are the fixed periodic payments that an investor or depositor makes into an…

Q: Suppose you are depositing an amount today in an account that earns 5.25% interest, compounded…

A: The amount of deposit to be made today can be calculated using the Present Value Formula

Q: uppose you want to have $800,000 for retirement in 30 years. Your account earns 9% interest. How…

A: The monthly deposit is also called the annuity in which the equal amount has been paid until the…

Q: Suppose you want to have $800,000 for retirement in 30 years. Your account earns 9% interest…

A: The amount that need to be deposited can be calculated using the formula of future value of annuity.…

Q: Suppose you want to have $400,000 for retirement in 30 years. Your account earns 5% interest. How…

A: Computation as follows: Hence, each month deposit will be $480.62.

Q: You deposit $200 each month into an account earning 3% interest compounded monthly. a) How much…

A: Monthly Deposit = 200 Monthly Compounding Time Period (n) = 240 months Interest Rate (r) = 3%/12 =…

Q: Suppose we are going to make monthly deposits in to an account with an annual interest rate of 4.1%…

Q: Suppose you want to have 800000 for retirement in 35 years. Your account earns 5% interest. hoe…

A: Amount that need to be deposit every month can be calculated using the formula of future value of…

Q: Suppose you want to have $700,000 for retirement in 25years. Your account earns 9% interest. a) How…

A: In this we need to calculate the future value factor monthly and than calculate the monthly payment…

Q: Suppose you want to have $700,000 for retirement in 25 years. Your account earns 9% interest. a)…

A: a) Hence, amount to be deposited in each month is $624.37.

Q: You deposit $500 each month into an account earning 5% interest compounded monthly. a) How much…

A: The future value is the value of amount in future that has to paid or received at current or in…

Q: Suppose you want to have $800,000 for retirement in 25 years. Your account earns 7% interest. a)…

A: Future value of annuity = P * [ (1+r)^n - 1 ] /r Where, r = rate of interest per period i.e.…

Q: Suppose you deposit $22.000 in an account today that pays 6% interest, compounded annually. How long…

A: Information Provided: Initial deposit = $22,000 Future value = $76,000 Interest rate = 6% compounded…

Q: Suppose you want to have $500,000 for retirement in 20 years. Your account earns 8% interest. How…

A: Future value of each month payment (FV) = $500,000 Number of years to retirement = 20 Number of…

Q: Suppose you want to have $300,000 for retirement in 25 years. Your account earns 9% interest. a)…

A: According to the time value concept, a sum of money today has more purchasing power than the same…

Q: Suppose you have decided to put $200 at the end of every month in a savings account that credits…

A: Future value of annuities includes the amount being deposited and amount of compounding interest…

Q: How much would you need to deposit in the account each month?

A: Annuity Payments: These are payments of equal intervals made. Examples of annuity payments include…

Q: Suppose you want to have $400,000 for retirement in 25 years. Your account earns 7% interest. a.how…

A: Working note:

Q: You deposit $100 each month into an account earning 4% interest compounded monthly. a) How much…

A: Amount Deposited Each month is $100 Interest rate is 4% Compounded monthly Time period is 15 years…

Q: Suppose you want to have $800,000 for retirement in 20 years. Your account earns 7% interest. a) How…

A: Monthly payment refers to the periodic payment. These payments are made upto a fixed period or as…

Q: You want to be able to withdraw $50,000 each year for 15 years. Your account earns 7% interest. a)…

A: Here, Annual Withdrawals (PMT) is $50,000 Time Duration is 15 years Interest Rate is 7%

Q: You deposit $500 each month into an account earning 3% interest compounded monthly. Round to the…

A: We need to use future value of annuity formula to calculate money in account after 25 years Future…

Q: You deposit $400 each month into an account earning 3% interest compounded monthly. Round to the…

A: Monthly deposit (m) = $400 Monthly interest rate (r) = 0.0025 (i.e. 0.03 / 12) Monthly period (p) =…

Q: Suppose that each week, you deposit $43 into a savings account whose annual rate is 1.8% with weekly…

A: We need to use future value of annuity formula to calculate balance of account after 14 years. FV…

Q: Suppose you want to save $220,000 for retirement. You will do so by putting monthly deposits into an…

A: Retirement planning involves the set of activities that determines the income goals that an…

Q: You deposit $100 each month into an account earning 8% interest compounded monthly. a) How much will…

A: Monthly deposit (P) = $ 100 Interest rate = 8% Monthly interest rate (r) = 8%/12 =…

Q: Suppose you want to have $600,000 for retirement in 25 years. Your account earns 10% interest. How…

A: Future Value $ 6,00,000.00 Time Period 25 Interest Rate 10%

Q: If you put 20,000 in a savings account that pays interest at the rate of 4% compounded quarterly,…

A: Compound interest also called interest on interest. It is the addition of interest in the principal…

Q: Suppose you want to have $800,000 for retirement in 20 years. Your account earns 8% interest. a) How…

A: The amount to be invested each month will be compounded and will form a corpus und at the end of the…

Q: You deposit $300 each quarter into an account earning 5.8% interest compounded quarterly. a) How…

A: Annuity refers to series of annual payment which is paid or received at start or ending of specific…

Q: You deposit $200 each month into an account earning 8% interest compounded monthly. Round to the…

A: Answer b) Total amount put by us in account: = Amount monthly invested * 12 * number of years =…

Q: You deposit $100 in a savings account today, and this account accrues interest compounded annually…

A: Compounding is the power of increasing the amount of investment by adding interest in principal and…

Q: Suppose you want to have $800,000 for retirement in 20 years. Your account earns 6% interest. How…

A: Solution:- When an equal amount is deposited each period, it is called annuity. Future value of…

Q: You deposit $200 each month into an account earning 5% interest compounded monthly. How much will…

A: Future worth of the amount is referred as the worth of the currently deposited amount at some future…

Q: If you want $3,000,000 saved by the time you retire in 40 years and you earn 8% interest on your…

A: Amount required $3,000,000 Time is 40 years Interest rate is 8%

Q: a. You are planning for retirement, and would like to have $1,000,000 in the bank when you turn 65.…

A: Compounding is a concept used in investing. In case of compounding, interest is earned on both the…

Q: Suppose you want to have $600,000 for retirement in 20 years. Your account earns 5% interest.a) How…

A: The question given is related to the annuity payouts, which refers to a series of payments paid over…

Q: Suppose you want to have $700,000 for retirement in 20 years. Your account earns 6% interest. How…

A: Computation as follows: Hence, amount to be deposited in each month is $1515.02.

Q: You will deposit $5000 into a retirement account that earns 3% interest compounded annually. You…

A: Future value of the deposit = Future value of the single deposit i.e. $5000 + future value of the…

Question

Suppose you want to have $800,000 for retirement in 25 years. Your account earns 7% interest compounded annually. Round your answers to the nearest cent.

a) How much would you need to deposit in the account each month?

b) How much interest will you earn?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
Refer to the present value table information on the previous page. What amount should Brett have in his bank account today, before withdrawal, if he needs 2,000 each year for 4 years, with the first withdrawal to be made today and each subsequent withdrawal at 1-year intervals? (Brett is to have exactly a zero balance in his bank account after the fourth withdrawal.) a. 2,000 + (2,000 0.926) + (2,000 0. 857) + (2,000 0.794) b. 2,0000.7354 c. (2,000 0.926) + (2,000 0.857) + (2,000 0.794) + (2,000 0.735) d. 2,0000.9264