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Carla Lopez deposits $3,000 a year into her retirement account. If these funds have an average earning of 8 percent over the 40 years until her retirement, what will be the value of her retirement acc

Carla Lopez deposits $3,000 a year into her retirement account. If these funds have an average earning of 8 percent over the 40 years until her retirement, what will be the value of her retirement account? If a person spend $10 a week on coffee(assume $500 a year)what would be the future value of that amount over 10 years if the funds were deposited in an account earning 4 percent? A financial company that advertises on television will pay you $60,000 now in exchange for annual payments of $10,000 that you are expected to receive for a legal settlement over the next 10 years. If you estimate the time value of money at 10 percent, would you accept this offer? First, calculate the future value of the annual payment 510,000 times 15.937 =$159, 370 Next, calculate the present value of that future flow $159, 370 times 0.386 = $61, 516.82 Finally, die $60,000 being offered now is less than the present value of the future flow. Lovell' s alternative solution: use table on page 39 and solve for the present value of future annual payments of $10,000 per year $10,000 times 6 145(present value of a future series annuity) = $61, 450 (note, a calculator should provide the same value as in the book solution above). Tran Lee plans to set aside $1.800 a year for the next six years, earning 4 percent What would be the future value of this savings amount if you borrow $8 000 with a 5 percent interest rate to be repaid in five equal payment at the end of the next five years. what would be die amount of each payment?

 

Apr 13 2020 View more View Less

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