Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 5 years. She will have

5. Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 5 years. She will have enough to pay for the trip if she invests $5,000 per year until that anniversary and plans to make her first $5,000 investment on their first anniversary. Assume her investment earns a 4 percent interest rate, how much will she have saved for their trip if the interest is compounded in each of the following ways?

a. Annually b. Quarterly c. Monthly

6. Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the investment as follows:

Years 1 3 $15,000 each year

Year 4 to 6 $10,000 each year

Year 7 $25,000

Interest on the fund is 5%.

a) What is the present worth of this inheritance?

b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Financial Markets

Authors: Keith Pilbeam

2nd Edition

1403948356, 978-1403948359

More Books

Students also viewed these Finance questions

Question

=+Identify trends in the social media industry

Answered: 1 week ago