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Neko [114]
3 years ago
12

You plan on making a $235.15 monthly deposit into an account that pays 3.2% interest, compounded monthly, for 20 years. At the e

nd of this period, you plan on withdrawing regular monthly payments. Determine the amount that you can withdraw each month for 10 years, if you plan on not having anything in the account at the end of the 10 year period and no future deposits are made to the account. a. $769.27 b. $767.23 c. $78,910.41 d. $79,120.84 Please select the best answer from the choices provided A B C D
Business
1 answer:
crimeas [40]3 years ago
8 0

Answer:

Ans. a) $769.27 is the amount of money that you can withdraw every month for 120 months at a rate of 3.2% compounded monthly if you deposit $235.15 every month, for 20 years.

Explanation:

Hi, first we have to turn this compounded rate into an effective rate, in this case, effective monthly, that is by doing the following.

r(monthly)=\frac{0.032}{12} =0,00267

that is 0.267% effective monthly.

Now, we need to take all this annuities to 20 years in the future, which is going to be the present value to use in order to find the amount of moneuy that you can withdraw every month, for 120 months (10 years).

FutureValue=\frac{A((1+r)^{n} -1)}{r}

For A = 235.15; r =0,00267; n=240

FutureValue=\frac{235.15((1+0.00267)^{240} -1)}{0.00267}=78,910.41

Now, in order to find the amount of money to withdraw for 10 years, every month, we have to use the following equation.

PresentValue=\frac{A((1+r)^{n}-1) }{r(1+r)^{n} }

Since the future value 20 years from now is the present value of the annuity we are looking for, all should look like this.

78,910.41=\frac{A((1+0.00267)^{120}-1) }{0.00267(1+0.00267)^{120} }

78,910.41=A(102.5781087)

A=\frac{78,910.41}{102.5781087} =769.27

So the answer is a) $769.27

Best of luck.

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Which of these is not something to consider when trying to get a positive return on investment (roi) for higher education?
Fantom [35]

Something not to consider when trying to get a positive return on investment (ROI) for higher education is: c. the type of food that is offered on the meal plan.

<h3>What is rate of return?</h3>

Rate of return can be defined as a net gain (profit) or loss that is associated with an investment over a specified period of time, and it's usually expressed as a percentage of the investment's initial cost.

This ultimately implies that, the rate of return must be higher than the rate of inflation in order for any business firm or individual to earn money on their investments.

Also, a positive return on investment (ROI) entails a net gain (profit) from an investment over a specified period of time. This ultimately implies that, the type of food that is offered on the meal plan isn't something to consider when trying to get a positive return on investment (ROI) for higher education.

Read more on return on investment here: brainly.com/question/23603222

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Complete Question:

Which of these is not something to consider when trying to get a positive return on investment (ROI) for higher education?

a. The cost of attendance.

b. The financial aid package that is offered to you.

c. The type of food that is offered on the meal plan.

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5 0
1 year ago
An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has
aliya0001 [1]

Answer:

Years to maturity       Price of Bond C            Price of Bond Z

         4                               $1,084.42                       $711.03

         3                               $1,065.93                       $774.31

         2                               $1,045.80                      $843.23

         1                                $1,023.88                       $918.27

Explanation:

Note: See the attached excel for the calculations of the prices of Bond C and Bond Z.

The price of each bond of the bond can be calculated using the following excel function:

Bond price = -PV(rate, NPER, PMT, FV) ........... (1)

Where;

rate = Yield to maturity of each of the bonds

NPER = Years to maturity

PMT = Payment = Coupon rate * Face value

FV = Face value

Substituting all the relevant values into equation (1) for each of the Years to Maturity and inputting them into relevant cells in the attached excel sheet, we have:

Years to maturity       Price of Bond C            Price of Bond Z

         4                               $1,084.42                       $711.03

         3                               $1,065.93                       $774.31

         2                               $1,045.80                      $843.23

         1                                $1,023.88                       $918.27

Download xlsx
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Pachacha [2.7K]

Answer:

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Answer:

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