You are chairperson of the investment fund for Middle Hockey League. You are asked to set up a fund of quarterly payments to be compounded quarterly to accumulate a sum of $410,000 after 10 years at an 12 percent annual rate (40 payments). The first payment into the fund is to occur three months from today, and the last payment is to take place at the end of the tenth year. (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.) a. Determine how much the quarterly payment should be. Quarterly payment b. On the day after the sixteenth payment is made (the end of the fourth year) the interest rate goes up to a 16 percent annual rate, and you can earn a 16 percent annual rate on funds that have been accumulated as well as all future payments into the fund. Interest is to be compounded quarterly on all funds. Determine how much the revised quarterly payments should be-after this rate change (there are 24 payments and compounding dates). The next payment will be in the fourth quarter of the fourth year. (Round your intermediate calculations to the nearest whole dollars.) Revised quarterly payments $

You are chairperson of the investment fund for Middle Hockey League. You are asked to set up a fund of quarterly payments to be compounded quarterly to accumulate a sum of $410,000 after 10 years at an 12 percent annual rate (40 payments). The first payment into the fund is to occur three months from today, and the last payment is to take place at the end of the tenth year. (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.) a. Determine how much the quarterly payment should be. Quarterly payment b. On the day after the sixteenth payment is made (the end of the fourth year) the interest rate goes up to a 16 percent annual rate, and you can earn a 16 percent annual rate on funds that have been accumulated as well as all future payments into the fund. Interest is to be compounded quarterly on all funds. Determine how much the revised quarterly payments should be-after this rate change (there are 24 payments and compounding dates). The next payment will be in the fourth quarter of the fourth year. (Round your intermediate calculations to the nearest whole dollars.) Revised quarterly payments $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 34P

See similar textbooks

Similar questions

You are chairperson of the investment fund for the Continental Soccer League. You are asked to set up a fund of semiannual payments to be compounded semiannually to accumulate a sum of $340,000 after fifteen years at a 12 percent annual rate (30 payments). The first payment into the fund is to take place six months from today, and the last payment is to take place at the end of the fifteenth year. Use Appendix A and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. Determine how much the semiannual payment should be. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Semi-annual payment On the day after the sixth payment is made (the beginning of the fourth year), the interest rate goes up to an annual rate of 14 percent. This new rate applies to the funds that have been accumulated as well as all future payments into the fund. Interest is to be…
You are chairperson of the investment fund for the Continental Soccer League. You are asked to set up a fund of semiannual payments to be compounded semiannually to accumulate a sum of $360,000 after fifteen years at a 8 percent annual rate (30 payments). The first payment into the fund is to take place six months from today, and the last payment is to take place at the end of the fifteenth year. Use Appendix A and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. Determine how much the semiannual payment should be. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) On the day after the sixth payment is made (the beginning of the fourth year), the interest rate goes up to an annual rate of 10 percent. This new rate applies to the funds that have been accumulated as well as all future payments into the fund. Interest is to be compounded semiannually on all funds.…
MarySullivan, capital outlay manager for Waxy Widgets, has been instructed toestablish a contingency fund to cover the expenses over the next two years (24months) associated with repairing defective widgets from a new production process.Waxy Widgetsâ€™ controller wants to make equal monthly cash deposits into thisfund. If Mary faces the following monthly repair costs and has $1 million tostart the fund today, what will be her monthlypayments into the fund in order to assume that all repair costs will becovered? Mary will make her first payment one month from today, and the fundwill earn 6 percent, compounded monthly. Months Repair Costs perMonth 1â€“4 $500,000 5â€“12 $250,000 13â€“24 $100,000
Cindy Medavoy will invest $6,740 a year for 23 years in a fund that will earn 5% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 23 years? If the first payment occurs at year-end, what amount will be in the fund in 23 years? First payment today First payment at year-end
Mary Sullivan, capital outlay manager for Waxy Widgets, has been instructed to establish a contingency fund to cover the expenses over the next two years (24 months) associated with repairing defective widgets from a new production process. Waxy Widget’s controller wants to make equal monthly cash deposits into this fund. If Mary faces the following monthly repair costs and has $1 million to start the fund today, what will be her monthly payments into the fund in order to assume that all repair costs will be covered? Mary will make her first payment one month from today, and the fund will earn a nominal rate of 6 percent, compounded monthly. Months Repair Costs per month 1-4 $500,000 5-12 $250,000 13-24 $100,000
Laurence contributed $4,135 at the end of every 6 months to an RRSP fund earning 7.11% compounded semi-annually for 12 years. a. What was the future value of the fund at the end of the term? Round to the nearest cent b. What was the amount of interest earned over this period? How much money should Zhang invest today in a fund that earns interest at 3.36% compounded quarterly, if she wants to receive $4,500 at the end of every 6 months for the next 4 years? Timothy planned to buy a house but could afford to pay only $13,500 at the end of every 6 months for a mortgage with an interest rate of 5.50% compounded semi-annually for 20 years. She paid $24,750 as a down payment. a. What was the maximum amount she could afford to pay for a house? Round to the nearest cent b. What was her total amount spent for the house through the mortgage period including the downpayment (not taking the time-value of money into account)? Round to the nearest cent c. What was the total amount of…
On January 1, Alan King decided to transfer an amount from his checking account into aninvestment account that later will provide $80,000 to send his son to college (four yearsfrom now). The investment account will earn 8 percent, which will be added to the fund eachyear-end.Required (show computations and round to the nearest dollar):1. How much must Alan deposit on January 1?2. What is the interest for the four years?
Instead of investing the entire $1,062,000, Bogut invests $278,000 today and plans to make 9 equal annual investments into the fund beginning one year from today. What amount should the payments be if Bogut plans to establish the $2,122,938 foundation at the end of 9 years?
Ted Houser wishes to accumulate a fund of $40,000 for the purchase of a house and lot. He plans to deposit $4,000 semiannually at the end of each 6 months. Assuming interest at 14% a year compounded semiannually, how many deposits of $4,000 each will be required, and what is the amount of the last deposit?
Laura invested $90 at the end of every month into an RRSP for 13 years. If the RRSP was growing at 4.20% compounded quarterly, how much did she have in the RRSP at the end of the 13-year period? How much money should Kimberly invest today into a fund that earns interest at 5.25% compounded quarterly, if she wants to receive $4,750 at the end of every 6 months for the next 6 years? Richard deposits $650 at the end of every month for 2 years and 3 months in a retirement fund at 4.04% compounded semi-annually. a. What type of annuity is this? Ordinary simple annuity Ordinary general annuity Simple annuity due General annuity due b. How many payments are there in this annuity?
Suppose your client is 35 years old and has already saved $150,000 for retirement. How much does your client need to contribute to a fund each month for the next 25 years (first payment at the end of this month), to reach a retirement goal of 4,000,000, if the fund is expected to earn an effective annual rate of 12%?
A woman expects to have $10,000 in 4 years to buy a pair of earrings. She plans to create a sinking fund by depositing an amount every 6 months. If the fund earns 16% interest compounded semi-annually, find the semi-annual deposit and construct a sinking fund schedule.