Question
PLEASE! You can afford to deposit $1000 each month out of your paycheck for 20 years into an investment account that earns 18% APR. The
PLEASE!
You can afford to deposit $1000 each month out of your paycheck for 20 years into an investment account that earns 18% APR. The interest on your investment account will compound monthly. At the end of year 10 you plan on withdrawing $40,000 to purchase a car. How much your investment be worth at the end of the 20 years?
What is the effective interest rate of the loan? What is the loan balance at the end of 2 years? Determine the APR Determine the periodic annual interest rate Determine the number of compounding periods per year, m Determine the number of years of cash flow from Year 0 to Year 10 Determine the total number of compounding periods, n, from Year 0 to Year 10 Determine the number of years of cash flow from Year 10 to Year 20 Determine the total number of compounding periods, n, from Year 10 to 20 Draw the Cash Flow diagram Determine the Future Worth at the end of Year 10 Determine the new Future Worth after the withdrawal at the end of Year 10, which is now a Present Worth. Determine the Future Worth at the end of Year 20 of the Present Worth at the end of Year 10 Determine the Future Worth of the deposits from Year 10 to Year 20 Determine the total Future Worth
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