Question
1) Your Aunt will help pay for some of your future expenses by depositing $60,000 into an account in the Amhearst Saving Bank at 6.5%
1)
Your Aunt will help pay for some of your future expenses by depositing $60,000 into an account in the Amhearst Saving Bank at 6.5% interest for n = 8 years. Then one year after this initial period, (at n + 1) you start to withdraw the money and will continue to do so, making 4 annual equal withdrawals, totally drawing down the account to zero dollars after your last withdrawal. How much are you able take out every year? Assume that the interest paid by the bank is staying the same both during the accumulation and the withdrawal periods. To help solve this problem, create a cash flow diagram.
2)
Calculate the present value of an annuity of $3,000 dollars per year for 32 years, at an annual interest rate of 2 percent? Provide your answer to the nearest cent.
3)
Dickenson is making 17 annual payments on a loan for a house ($400,000 borrowed) which, like most mortgage loans, is amortized. If the annual interest rate is 6.2%, what part of the first payment (dollar amount) goes toward reducing the principal?
4)
Windham Co. stock is predicted to have the following gain or loss in the coming year: 34% with probability 50% , 18% with probability 30%, and -17% with probability 20%. What is Windham Co stock's expected rate of return to two places as a percent?
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