The town of Walkerville borrows $5,000,000 at 7% c.s.a. interest payable semi-annually, full principal due and payable in 10 years. A sinking fund is set up with semi-annual deposits made estimated to earn 4%c.s.a. After 4 years have passed it is found that the fund contains $1,700,000. Find the new semi-annual contributions necessary for the fund to achieve its goal if for the remaining 6 years the estimated rate of interest is 5% c.s.a.

The town of Walkerville borrows $5,000,000 at 7% c.s.a. interest payable semi-annually, full principal due and payable in 10 years. A sinking fund is set up with semi-annual deposits made estimated to earn 4%c.s.a. After 4 years have passed it is found that the fund contains $1,700,000. Find the new semi-annual contributions necessary for the fund to achieve its goal if for the remaining 6 years the estimated rate of interest is 5% c.s.a.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A state agency issues $575 million in bonds to repair bridges in the state. The state establishes a sinking fund by depositing $4 million at the end of each quarter into the fund for 20 years to repay the bonds. The fund earns an annual interest rate of 5.8% compounded quarterly. How much money (in millions of dollars) is in the fund after 20 years? (Round your answer to two decimal places.)
Southern Land Company plans to raise $200,000 over a 2-year period so they can purchase a parcel of land. In order to obtain this amount, the company has decided to make quarterly investments into a sinking fund that will earn 8% per year compounded quarterly for the next 2 years. Using the sinking fund table, calculate the amount of each quarterly sinking fund payment required to raise $200,000 in 2 years.
A company project needs to establish a fund within a ten-year period by making annual deposits of ₱78,000, where deposits are to be made at the beginning of each year. If the company board decides to change the plan and prefers to make the deposits at the end of each each instead, what amount should the annual deposits be to completely establish the fund at the end of the 10-year period? Annual interest is at 8.4%
The city isrequired to make regular payments every 3 months into a sinking fund paying 5.4% compounded quarterly. At the end of 10 years, the bond obligation will be retired with a cost of $5,000,000. A) What should each payment be? B) How much is earned during the 10th year?
Payments of $4,000 are made into a fund at the beginning of each year for ten years. The fund is invested at an annual effective rate of i. The interest generated is reinvested at 13%. The total accumulated value at the end of the ten years is $110,000. Find i. (Round your answer to two decimal places.)
A corporation creates a sinking fund in order to have $510,000 to replace some machinery in 12 years. How much should be placed in this account at the end of each quarter if the annual interest rate is 6.3% compounded quarterly? (Round your answers to the nearest cent.) $ How much interest would they earn over the life of the account? $ Determine the value of the fund after 2, 4, and 6 years. 2 years $ 4 years $ 6 years $ How much interest was earned during the fourth quarter of the 5th year? $
A corporation creates a sinking fund in order to have $440,000 to replace some machinery in 8 years. How much should be placed in this account at the end of each week if the annual interest rate is 3.8% compounded weekly? (Round your answers to the nearest cent.) $ How much interest would they earn over the life of the account? $ Determine the value of the fund after 2, 4, and 6 years. 2 years$4 years$6 years$ How much interest was earned during the second week of the 4th year?
A company wishes to spend $40,000 for new equipment and decides to set up a sinking fund to accumulate this money over the 3-year period. If payments are to made to the fund quarterly with interest compounded quarterly at an annual rate of 5%, how large should the payments be?
Abc plans to construct an adiitional building at the end of 10 years at an estimated cost of P5,000,000. To accumulate this amount, it will deposit equal year-end amounts in a fund earning 13%. However, at the end of the fifth year, it decided to have a larger building estimated to cost P8,000,000. What is should be the annual deposit for the last five years?
A corporation creates a sinking fund in order to have $950,000 to replace some machinery in 11 years. How much should be placed in this account at the end of each week if the annual interest rate is 3% compounded weekly? (Round your answers to the nearest cent.)$ How much interest would they earn over the life of the account?$ Determine the value of the fund after 2, 4, and 6 years. 2 years $ 4 years $ 6 years $ How much interest was earned during the fourth week of the 6th year?
Red Company invested $10,000 in a fund that was earning interest at a rate of 4.00% compounded semi-annually. After 2 years and 6 months, the company transferred these funds to another investment that was earning interest at 5.50% compounded monthly. a. What is the balance in the fund at the end of 2 years and 6 months? $11,040.81 Round to the nearest cent b. What is the balance in the fund at the end of 6 years (from the initial investment)? $0.00 Round to the nearest cent c. By what amount did the fund grow during the 6 year period? Round to the nearest cent Give typing answer with explanation and conclusion
Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 2.5 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses are 0.55 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 7 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual funds over the two-year investment period. Select one: a. 3.77% b. 5.09% c. 7.54% d. 8.86% e. 10.18%

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