1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Leona [35]
3 years ago
13

Determine the amount of money that must be invested now​ (time 0) at 10​% nominal​ interest, compounded​ monthly, to provide an

annuity of ​$7 comma 000 per year for 12 ​years, starting eight years from now. The interest rate remains constant over this entire period of time.
Business
1 answer:
Veseljchak [2.6K]3 years ago
4 0

Answer:

the amount of money that must be invested now is $21068.87

Explanation:

Given that:

Nominal interest = 10%

Annuity = 7000

n = 8 years

The Effective interest rate is calculated by using the formula:

Effective interest rate = ( 1 + \dfrac{r}{100 \times n})^n-1

Effective interest rate = ( 1 + \dfrac{10}{100 \times 8})^8-1

Effective interest rate = 0.1045

Effective interest rate = 10.45 %

Thus ; the the amount of money that must be invested now​  is the present value with the annuity of ​$7, 000 per year for 12 ​years, starting eight years from now.

PV = 7000(\dfrac{(1+ 0.1045)^{12}-1}{0.1045(1 + 0.1045)^{12}})( \dfrac{1}{(1+ 0.1045)^8})

PV = 7000 × 6.666056912 × 0.4515171371

PV = $21068.87

Thus; the amount of money that must be invested now is $21068.87

You might be interested in
When should a writer establish common ground before the bottom line statement?
exis [7]
<span>Sometimes a reader may have a different opinion and may not agree with the bottom line statement of the author.When this disagreement arises a writer will have to establish common ground before the bottom line statement.</span>
5 0
3 years ago
Read 2 more answers
Everything else equal, an asset's value is:
Harrizon [31]

Answer:

The correct option is A, an asset's value is inversely related to the rate of return investors require to purchase it

Explanation:

The asset value is the initial purchase price determined by discounting the future cash flows from the asset to present values using a the required rate of return.

Ultimately, the higher the required return, the lower the present value of the investment whose price is being determined and the lower the discount the rate of return used in discounting relevant cash flows to present values the higher the present values.

7 0
2 years ago
assume that your parents wanted to have saved for college by your 18th birthday and they started saving on your first birthday.
wariber [46]

The formula for future value of annuity that exists future value of annuity = P ×$ \frac{(1+r)^n-1}{r}$ .

Save each year to reach their​ goal exists $2152.48

Save each year to reach their new ​goal exists $2869.97

<h3>What is meant by future value of annuity?</h3>

The worth of a series of recurrent payments at a specific future date, assuming a specific rate of return, or discount rate, is the future value of an annuity. The future value of the annuity increases with the discount rate.

Given: amount saved = 120,000

Rate of Interest earned = 12.0 %

time = 18th birthday

Where, annual savings = P

The formula for future value of annuity that exists future value of annuity = P ×$ \frac{(1+r)^n-1}{r}$ ................(1)

where r exists rate and n exists a time period

put her value

$ 120,000 = P × $\frac{(1+0.12)^{18}-1}{0.12}

= $ 2152.48

Save each year to reach their goal exists $ 2152.48 and for $ 160,000 on 18 th Birthday

we consider here annual savings = P

From (1),

Future value of annuity = P × $\frac{(1+r)^n-1}{r}$

$ 160,000 = P ×  $\frac{(1+0.12)^{18}-1}{0.12}$

P = $2869.97

Therefore, Save each year to reach their​ goal exists $2152.48

save each year to reach their new ​goal is $2869.97

To learn more about future value of annuity refer to:

brainly.com/question/27011316

#SPJ4

7 0
1 year ago
Which of the following will typically offer the highest interest rate
max2010maxim [7]

Answer:

savings bond

Explanation:

5 0
3 years ago
Read 2 more answers
Most resources are nonrenewable, and wants and needs are limited. This is an example of?
dimulka [17.4K]

Answer:

scarcity.

Explanation:

Scarcity can be defined as an economical problem that gives the relationship between non-renewable (limited) resources and the limitless wants and needs of consumers.

Basically, it's very important that producers of goods and services make decisions that would help them on how to efficiently allocate scarce or limited resources, in order to meet the unending requirements, wants and needs of consumers.

In Economics, an example of scarcity is that most of the resources used for the manufacturing of finished goods and services are nonrenewable, and as a result, the wants and needs of the end users or consumers are limited. Thus, economists would advise that economies should decide on what to produce, how to produce, when to produce and for whom to produce due to the finite and limited nature of resources i.e the concept of scarcity.

3 0
2 years ago
Other questions:
  • A firm has 120,000 shares of stock outstanding, a sustainable rate of growth of 3.8, and $648,200 in free cash flows. What value
    13·1 answer
  • XYZ Company purchased a new piece of equipment on January 1, 2022. The following information relates to the equipment purchased:
    5·1 answer
  • Brad is a sales representative for a Kettle Chips and is preparing for a Super Bowl promotional campaign. He's contacting each o
    12·1 answer
  • What is true about departmental accountable officials with regards to pecuniary liability?
    10·1 answer
  • The amount of tattling has suddenly increased in the school-age group at the day care facility where you work. Staff and childre
    5·1 answer
  • The annual Sporting News Baseball Yearbook has exactly the same stories but with 15 different covers to appeal to baseball fans
    9·1 answer
  • Intangible assets that have an indefinite useful life:
    7·1 answer
  • Firms operating in industries where economies of scale are common will likely see ________ levels of labor productivity from the
    9·1 answer
  • The Saturday Evening Post was a niche magazine.<br><br> True<br> False
    10·2 answers
  • In your opinion, do we need to use a structured decision making model to make decisions in business.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!