a)
To determine: The money that would be in the account if Person X leaves the money until the 25th birthday.
Introduction:
The value that is calculated after accumulating the interest for a number of periods is known as the
b)
To determine: The money that would be in the account if Person X leaves the money until the 65th birthday.
Introduction:
The value that is calculated after accumulating the interest for a number of periods is known as the future value. The future value of the cash stream is the future value of each cash flow.
c)
To determine: The money that Person X’s grandfather originally puts into the account.
Introduction:
The value that is calculated after accumulating the interest for a number of periods is known as the future value. The future value of the cash stream is the future value of each cash flow.
Want to see the full answer?
Check out a sample textbook solutionChapter 4 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
- Y our great aunt put some money in an account for you on the day you were born. This account pays 8% interest per year. On your 21st birthday the account balance was $5033.83. Your Questions: 1) What is the amount of money that your great aunt originally put in the account? 2) What is the amount of money that would be in the account if you left the money there until your 65th birthday?arrow_forwardYour grandfather put some money in an account for you on the day you were born. You are now 18years old and are allowed to withdraw the money for the first time. The account currently has $3,609 in it and pays an 4% interest rate. How much money would be in the account if you left the money there until your 25th birthday? If you left the money until your 65th birthday, what would the future value be? How much money did your grandfather originally put in the account? (Round to the nearest dollar)arrow_forwardWhen you were born, your parents started to deposit monthly $1,000 in the bank. The bank offers a fixed interest rate of 13 percent. On your 18th birthday, your parents decide to withdraw the money that they deposited to pay for your college tuition. How much money can they expect to withdraw?arrow_forward
- Your grandmother has been putting $1,000 into a savings account on every birthday since your first (that is, when you turned one). The account pays an interest rate of 3%. How much money will be in the account immediately after your grandmother makes the deposit on your 18th birthdayarrow_forwardAnn's grandmother put some money in an account for her on the day she was born. She is now 18 years old and is allowed to withdraw the money for the first time. The account currently has Ksh400,000 in it and pays an 8% per annum interest rate. i. Calculate how much money would be in the account if she left the money there until her 70th birthday.arrow_forwardYour wealthy uncle established a $2,500 bank account for you when you were born. For the first 8 years of your life, the interest rate earned in the account was 6%. Since then rates have been only 4%. Now you are 21 years old and ready to cash in. How much is in your account?arrow_forward
- Your wealthy uncle established a bank account with $1,300 for you when you were born. For the first 8 years of your life, the interest rate earned on the account was 6%. Since then, rates have been only 4%. Now you are 21 years old and ready to cash in. How much is in your account? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Amountarrow_forwardWhen you were born, your dear old Aunt Minnie promised to deposit $1,000 in a savings account for you on each and every one of your birthdays, beginning with your first. The savings account bears a 5 percent compound annual rate of interest. You have just turned 25 and want all the cash. However, it turns out that dear old (forgetful) Aunt Minnie made no deposits on your fifth, seventh, and eleventh birthdays. How much is in the account now – on your twenty-fifth birthday.arrow_forwardA mother wants to invest $8 comma 000.00 for her son's future education. She invests a portion of the money in a bank certificate of deposit (CD account) which earns 4% and the remainder in a savings bond that earns 7%. If the total interest earned after one year is $ 480.00 comma how much money was invested in the CD account? The total interest earned after one year is $480.00 . How much money was invested in the CD account?arrow_forward
- When you were born, your dear old Aunt Minnie promised to deposit $1,000 in a savings account for you on each and every one of your birthdays, beginning with your first. The savings account bears a 7 percent compound annual rate of interest. You have just turned25 and want all the cash. However, it turns out that dear old (forgetful) Aunt Minnie made no deposits on your seventh, and eleventh birthdays. How much is in the account now – on your twenty-fifth birthdayarrow_forwardYour parent started to deposit monthly $20,000 in the bank 2 years after birth. The bank offers are fixed interest rate of 6%. On his 18th birthday, your parents decide to withdraw the money that deposited to pay for your college tution. How much money can they expected withdraw?arrow_forwardYour grandma gave you $150 to start a college fund when you were born. This account earns 6% interest compounded yearly. Then, she gave you $10 in this account on each of your birthdays. Finally, you found a $20 bill on the ground on your 8th birthday that you also put into this account. How much much money is in this account on your 18th birthday (after your grandma made her deposit)? Do by formulas only pls, you may use excel to verify if you want.arrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education