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The annual payment is $230 for next 15 years at 11% of an
Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.
Here,
The present value of an annuity is “
The periodic payments are “PMT”.
The interest rate is “r”.
The maturity period of number of years is “n”.
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Chapter 4 Solutions
CFIN (with MindTap Finance, 1 term (6 months) Printed Access Card) (MindTap Course List)
- 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 annuityarrow_forwardSuppose that you'd like to retire in 40 years and you want to have a future value of $ 500000 in a savings account. Also suppose that your employer makes regular monthly payments into your retirement account. If you can expect an APR of 7.5% for your account, how much do you need your employer to deposit each month? Employer Contribution = The formulas we have been using assume that the interest rate is constant over the period in question. Over a period of 40 years, though, interest rates can vary widely. To see what difference the interest rate can make, let's assume a constant APR of 4% for your retirement account. How much do you need your employer to deposit each month under this assumption? Employer Contribution = rate dic restarrow_forwardSuppose you want to have $600,000 for retirement in 25 years. Your account earns 10% interest. How much would you need to deposit in the account each month?arrow_forward
- Suppose you want to have $500,000 for retirement in 25 years. Your account earns 9% interest.a) How much would you need to deposit in the account each month?b) How much interest will you earn?arrow_forwardSuppose 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? $arrow_forwardSuppose that you’d like to retire in 40 years and you want to have a future value of $ 1000000 in a savings account. Also suppose that your employer makes regular monthly payments into your retirement account. If you can expect an APR of 6.5% for your account, how much do you need your employer to deposit each month? Employer Contribution = The formulas we have been using assume that the interest rate is constant over the period in question. Over a period of 40 years, though, interest rates can vary widely. To see what difference the interest rate can make, let’s assume a constant APR of 5% for your retirement account. How much do you need your employer to deposit each month under this assumption? Employer Contribution =arrow_forward
- What annual interest rate wouldyou need to earn if you wanted a$600 per month contribution togrow to $46, 500 in six years?arrow_forwardHow much must you deposit each year into your retirement account starting now and continuing through year 10 if you want to be able to withdraw $80,000 per year forever, beginning 31 years from now? Assume the account earns interest at 15% per year. What is the answer, and how can I get it?arrow_forwardSuppose that you earn $45,600 per year. What is your monthly salary? $ Assume that you deposit 10% of your monthly salary into an investment account with an APR of 4.8% every month for 30 years. We will assume for simplicity that your salary never changes, so you are depositing the same amount every month for 30 years. What will the balance of your investment account be after 30 years? Round your answer to the nearest cent. The balance of the account is $ How much of the investment account balance is interest? The amount of interest in the account is $arrow_forward
- If you were to invest $2000 today and in return receive $450 anually for 6 years, what is your annual rate of return?arrow_forwardIf you are considering the purchase of a consol that pays $60 per year forever, and the rate of interest you want to earn is 10% per year, how much money should you pay for the consol?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
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