You have a client who wants to buy a house in 2 years. He needs $40,000 for a down payment. If he can earn 5% compounded quarterly, on his savings, how much does he need to invest today to achieve his goal of $40,000 in 2 years?

You have a client who wants to buy a house in 2 years. He needs $40,000 for a down payment. If he can earn 5% compounded quarterly, on his savings, how much does he need to invest today to achieve his goal of $40,000 in 2 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 35P

See similar textbooks

Related questions

Q: If your account earns 9% interest compounded monthly, how much will you need to deposit each month…

A: Present Value of Annuity: It represents the present value of a future stream of annuity cash flows.…

Q: Steve Madison needs $250,000 in 10 years. How much must he invest at the end of each year, at 5%…

A: Annuity amount = Futur value of annuity amount / {[(1+r)^n-1] /r}

Q: you wish to save $30,000 as a down payment for a house in 7 years. How much must you save every year…

A: Given: FV =$30000NPER =7 YearsRate of Interest =4%

Q: suppose you want to make sure you have 2,000,000 when you retire in 35 years. what even annual…

A: We need to use future value of ordinary annuity formula to calculate the annual payment. The formula…

Q: monthly nominal rate of return must his investment earn for him to achieve his goal? 2. If the…

A: Present value refers to the value present today of the future stream of payments based on the…

Q: You just turned 30 and want to retire in 35 years with $1,500,000. Assuming you can get a rate of…

A: Here, To Find: Monthly deposits =?

Q: The annual income from a rented house is $35,000. The annual expenses are $5,000. If the house can…

A: Annual Income = $35,000 Annual Expenses=$5,000 Net Cashflow =$35,000 -$5,000 =$45,000 Ending…

Q: When you retire, you plan to draw $50,000 per year from your retirement accounts, which will be…

A: Annuity is the no. of payments which are equal in size and made in equal interval of time. Person…

Q: d) You want to retire in 45 years with $1 million in the bank. You think you can get an average of…

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: could you go step by step on how to solve?

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: You want to buy a house within 3 years, and you are currently saving for the down payment. You plan…

A: Future value of growing annuity The future value of a growing annuity is the value of money received…

Q: Bill wants to invest $45,000 for the next 5 years. If the investment is going to generate 8%…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: compounded

A: Formula to calculate the present value or amount to be deposited today is: PV = FV/(1+r)^n Where PV…

Q: 1) What monthly nominal rate of return must his investment earn for him to achieve his goal? 2) If…

A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…

Q: Suppose you want to have $300,000 in the bank when you retire in 45 years and the bank pays 3%…

A: given, rate = 3% no of years= 45 FV= 300,000

Q: Sam wants to have $160,000 in four years from now. She found an investment, earning 6% per year,…

A: The amount that should be invested now to earn a certain sum of money in the future is equal to the…

Q: If Say you want to buy your dream car, costing $40k, in 5 years. You are saving up for that by…

A: Car Cost = Future Value Required = 40,000 N = 60 months Monthly Interest Rate = 0.25% Monthly…

Q: Bob and Pat want to purchase a vacation home in ten years and need $45,000 for a down payment. How…

A: Time value tells that money received today has more value than that of receiving exact value later…

Q: You bought a home for $150,000 and put down 10% and got a mortagage at an interest rate of 4.35% per…

A: We will make use of the PMT function in Microsoft Excel to determine the monthly payment on the…

Q: You have a client who wants to buy a house. He needs $40,000 for a down payment and has $30,000…

A: Here we have to invest $ 30000 at the 5% annual rate but compounded quarterly. and want $ 40000 in…

Q: How much does Steve need to invest today, If he wants to have $50,000 in 15 years? He opens an…

A: Present Value = Future Value / (1+r)^n Where, r = rate of return per period i.e. 7.8%/12 = 0.65% or…

Q: Christopher wants to have 50,000 pesos in 4 years by saving equal regular payments. He can make a…

A: Present value is the sum of the current value of money of future cash flows. It is also known as a…

Q: 4. You wish to purchase a house that costs $294,000, and the bank requires you to have 12% of the…

A: A down payment is an early stage payment made for a particular good purchased through financing.

Q: If you need P350,000 for a down payment on a house in 3 years, how much money must you invest today…

A: Present value: It can be defined as today’s worth of an investment that will be received in the…

Q: You are looking to purchase a house for $196,000. If you put 20% down and finance the rest, what…

A: Monthly payments are fixed periodic payments that are made by borrower to the lender.

Q: You wish to have $40,000 dollars in 6 years. How much do you need to deposit today if the rate is…

A: The present value of the cash flow is the current worth of a cash flow at a certain rate of interest…

Q: Your plan is to have $40,000 in your account, 13 years from today. You can invest in an account that…

A: Future value required (FV) $40,000 Interest rate = 8.05% Monthly interest rate (r) = 8.05%/12 =…

Q: Today, you retire with $1,100,000 and you want to ensure that you can withdraw $1250 per week (52…

A: The question gives the following information:

Q: Tak wants to save $10 000 for a vacation. He deposits $150 at the end of each month for 4.5 years in…

A: Solved using Financial Calculator PMT = +/- 150 N = 4.5 years *12 months = 54 I/Y = 8.7/12 = 0.725…

Q: You’re buying your first house for $180,000, giving $35,000 as down payment. The amount you will…

A: The amount of interest payable over the term of the loan and the loan amount due is equal to the…

Q: Stuart Daniels estimates that he will need $26,000 to set up a small business in 7 years. (a) How…

A: The concept of the time value of money states that money earns interest and hence, money held today…

Q: You would like to have $550,000 when you retire in 40 years. How much should you invest each quarter…

A: Required Amount at retirement is $550,000 Time period is 40 years Interest rate is 6.4% Compounded…

Q: Suppose you invest $120 a month for 5 years into an account earning 9% compounded monthly. After 5…

A: Computation:

Q: Suppose you contribute $10 per week ($520 per year) into an interest-bearing account that earns 6% a…

A: Calculation of the funds that must be saved at end of 15 years:- Money that have been saved by…

Q: Tony wants to have $10,000 in 10 years after investing in an account that earns 4.6% compounded…

A: Future value is $10,000 Time period is 10years Interest rate is 4.6% Compounded monthly To find:…

Q: An investment product offers a monthly rate of return of 5%. If Amy invests $1,000 today for this…

A: The concept of the time value of money states that the current worth of money is more than its value…

Q: You buy a house for $250,000 and pay $50,000 down. What is the monthly payment if you finance the…

A: Loan amount acquired by the borrower for financing the purchase of any financial asset is the net…

Q: You have just retired with savings of $5 million. If you expect to live for 49 years and to earn 12%…

A: Present value = Annuity * PVAF ( Rate, Years )

Q: You have just retired with savings of $4 million. If you expect to live for 34 years and to earn 13%…

A: This is the case of an annuity due. This is because money is being spend at the start of each year.

Q: Kurt wants to have RM25,000 in an investment account four years from now. The account will pay 0.2…

Q: You plan to buy an apartment for $300,000, but you have only $8,000 in cash. The bank will loan you…

A: Time value of money is considered to determine the equated instalments that are due for each period.

Q: If you save $25 per week by bringing your lunch to school for 4 years, 12 months per year, and you…

A: There are two types of annuity that we could calculate: Ordinary annuity and Annuity due. The…

Q: You expect to retire in 25 years. After you retire, you want to be able to withdraw $3000 dollars…

A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…

Question

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You have a client who wants to buy a house. He needs $40,000 for a down payment and has $30,000 right now. If he can earn 5% compounded quarterly, on his savings, how long will it take to reach his goal?
You want to buy a house in 4 years and expect to need $25,000 for a down payment. If you have $15,000 to invest, how much interest do you have to earn (compounded annually) to reach your goal?
The Jones want to save $95,000.00 in 5 years for a down payment on a house. If they make monthly deposits in an account paying 5% compounded monthly, what is the size of the payments that are required to meet their goal?
suppose you want to make sure you have 2,000,000 when you retire in 35 years. what even annual payment would you have to make to get to your goal. if you can earn 6% a year
You are planning to build a vacation home. Your rich uncle offers you a $35,000 loan at 10.5% interest if you make $325 per month payments at the end of each month, how many payments will be required to pay off the loan, and how many years will this take? show relevant calculation
Answer with steps: You receive $4,000 from your aunt when you turn 21 and you immediately invest the money in a saving account. The account earns 12% annual rate, with continuous compounding. You get your first job after 5 years. You want to retire from work in 20 years. If you deposit $100 into your account every month for the first 10 years, and $200 every month for the next 10, how much will you have after 20 years? Assume you continue to earn 12% annual rate with continuous compounding.
You decide you need to generate 4,500 a month from your retirement savings to live comfortably. You are 25 years old, you will retire at 65 years old. You will die at 95 years old. You will leave $2 million to your heirs from this savings. Use 8% annual rate over the entire 70 year analysis. What do you need to save per month to reach your goal? If you wait until you are 35 to start saving, what do you need to save per month to reach your
You can afford payments of $950 per month for the purchase of a house. a) What is the largest amount you can finance for this house at 3.2% APR for 30 years? (Round to the nearest dollar.) b) How much total will you be paying the loan company at the end of 30 years for this house if you are paying $950 per month for 30 years? c) Now you are curious what the payments would be if you financed the amount found in part a) at 3.2% APR for 20 years instead of 30 years. How much would your monthly payments be if you financed the amount you found in part a) for 20 years at 3.2% APR? (Round to the nearest dollar.) d) Using the payments you found from part c), how much total will you pay the loan company at the end of 20 years?
Don Williams wants to buy a boat five years from today. He will need $40,000. Don wants you to calculate how much he needs today to put in the bank (10% compounded semiannually) to reach his goal in the future.
You have $1,000 today in your savings account. How long must you wait for your savings to be worth $2,000 if you are earning 0.25 percent interest, compounded annually? years (XXX.XX years) You want to have $40,000 for a down payment on a house 4 years from now. If you can earn 3.95 percent, compounded annually on your savings, how much do you need to deposit today to reach your goal? ($xxxx.xx)
You are contributing money to an investment account so that you can purchase a small piece of agricultural land in 5 years. You plan to contribute 6 payments of 30,000 a year. The first payment will be made today and the final payment will be made 5 years from now. If you earn 11% in investment account, how much money will you have in the account 5 years from now?
At the end of 5 years from now, your friend wants to have $225, 000 saved for a down payment on a house. He expects to earn 5%-compounded monthly-on his investments over the next 5 years. How much would your friend have to put in his investment account each month to reach his goal?