(Solution) 11. Suppose Your Father Gives You $15,000 Now To Help You To Get Through Next Four Years Of College. If You Are Able To Earn 6 Percent On The | Snapessays.com


(Solution) 11. Suppose your father gives you $15,000 now to help you to get through next four years of college. If you are able to earn 6 percent on the


11. Suppose your father gives you $15,000 now to help you to get through next four years of college. If you are able to earn 6 percent on the deposited funds, how much equal payment can you withdraw at the end of each year for next four years? Assume that you pay your first tuition one year from today.

 

 

Suppose we are examining an asset that promises to pay $5,000 at the end of each of the next three years. The cash flows from this asset are in the form of a three-year, $5,000 ordinary annuity. If we require 12 percent return on this investment, how much are you willing to offer for this annuity? This problem is simply to calculate the present value of this three-year, $5,000 ordinary annuity. Thus, we need to discount each of these $5,000 payments back to the present at 12 percent discount rate to determine the total present value:

 

 

You deposit $500 semiannually into an account for 2 years. If each payment is made at the beginning of each period and the annual interest rate is 10 percent, what will be the future amount that you will have in this account?

 


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This question was answered on: May 23, 2022

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