Al Darby wants to withdraw $20200 (including principal) from an investment fund at the end of each year for five years. How shouldhe compute his required initial investment at the beginning of the first year if the fund earns 12% compounded annually?O $20200 divided by the present value of a 5-year, 12% ordinary annuity of 1.$20200 times the future value of a 5-year, 12% ordinary annuity of 1.O $20200 times the present value of a 5-year, 12% ordinary annuity of 1.O $20200 divided by the future value of a 5-year, 12% ordinary annuity of 1.

Annuity refers to a series of cash flow that are usually constant and fixed in nature and occur on a…

Answered: Al Darby wants to withdraw $20200…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

See similar textbooks

Similar questions

Amount of an Annuity John Goodheart wishes to provide for 6 annual withdrawals of 3,000 each beginning January 1, 2029. He wishes to make 10 annual deposits beginning January 1, 2019, with the last deposit to be made on January 1, 2028. Required: If the fund earns interest compounded annually at 10%, how much is each of the 10 deposits?
Al Darby wants to withdraw $21400 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 12% compounded annually? $21400 times the present value of a 5-year, 12% ordinary annuity of 1. $21400 times the future value of a 5-year, 12% ordinary annuity of 1. $21400 divided by the present value of a 5-year, 12% ordinary annuity of 1. $21400 divided by the future value of a 5-year, 12% ordinary annuity of 1.
Troy Long wishes to deposit a single sum of money in a savings account so that five equal annual withdrawals of $2,000 can be made before depleting the fund. If the first withdrawal is to occur 1 year after the deposit and the fund pays interest at a rate of 5% compounded annually, how much should he deposit? suppose the first withdrawal does not occur until 3 years after the deposit. How much should be deposited?
An individual wishes to accumulate $1,700,000 in 20 years. If he wants to deposit a certain amount of fund annually in the first 10 years and do nothing in the following 10 years, what size deposit is required to meet the stated objective? Assume the annual compound interest rate is 4%.
A saver plans to make 25 deposits of 100 at the end of each year. If the interest rate were 6% effective per annum, he would accumulate a fund of amount F on the date of the last payment. The saver makes the first 10 deposits of 100. However, the account only credits an effective annual interest rate of 5%. Therefore, the saver determines that he must increase each of the remaining 15 deposits to X so that he can accumulate the desired fund of F. Assuming that the fund continues to earn 5% effective annual interest, find X.
a) An individual wishes to accumulate $1,700,000 in 20 years. If he wants to deposit a certain amount of fund annually in the first 10 years and do nothing in the following 10 years, what size deposit is required to meet the stated objective? Assume the annual compound interest rate is 4%. b) Solve the following, using interest rate at 7% compounded annually: i) What is the amount that will be accumulated in a sinking fund at the end of the 15th year if $200 is deposited in the fund at the beginning of each of the 15 years? ii) What uniform annual payment for 30 years is equivalent to spending $10,000 immediately, $11,000 at the end of 10 years, $12,000 at the end of 20 years, and $2,000 a year for 30 years?
Problem: Mary deposits 1000 into a fund at the beginning of each year for 10 years. At theend of 15 years, she makes an additional deposit of X. At the end of 20 years, Maryuses the accumulated balance in the fund to buy a perpetuity-immediate with annualpayments of 2000 for 10 years, and 1000 per year thereafter. The annual effectiveinterest rate is 7%.(i) Calculate the time value of the perpetuity at the end of 20 years.(ii) Determine X.
On January 1, 2021, you deposited $6,100 in a savings account. The account will earn 10 percent annual compound interest, which will be added to the fund balance at the end of each year. Required: 1. What will be the balance in the savings account at the end of 4 years? (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 2. What is the total interest for the 4 years? (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 3. How much interest revenue did the fund earn in 2021 and in 2022?
A trust notifies you that you are entitled a grant that would give you annual payments of $6,200 per year in perpetuity. The first payment will be made to you three years later (at the end of year 3). The annual interest rate is 10% (APR). What is the present value of the grant? A. 56,363.64 B. 46,581.52 C. 51,239.67 D. 62,000.00
Computing the Future Value of an Annuity Stone will deposit $8,250 at the beginning of each year for 10 years in a fund that earns 5%, compounded annually. What is the total amount of the fund at the end of 10 years? Round your answer to the nearest whole number. Do not use a negative sign with your answer. $ Answer
A lump sum S deposited into either fund X or fund Y will be exactly sufficient to provide a perpetuity of $100 per year with the first payment due at the end of one year. Fund X will earn interest at an effective annual rate of 10% for the first 30 years and 6% thereafter. Fund Y will earn interest at a level effective annual rate of j. In which of the following ranges is j? someone help?
Cameron invested $11,500 into a fund earning 5.25% compounded quarterly. He plans to withdraw $800 from the fund at the end of every month. If the first annuity withdrawal is to be made 5 years from now, how long will it take for the fund to be depleted? 0 years 0 months Express the answer in years and months, rounded to the next period

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

SEE MORE TEXTBOOKS