Calculating the periodic amounts
Not what you're looking for?
1. Lily Henry wants to buy her son a car for his 21st birthday. If Lily's son is turning 16 today, and interest is 8% per annum, compounded semiannually, what would Lily's semiannual investment need to be if the car will cost $30,000 and the first payment is made six months from today?
2. Determine the amount of the specific payment needed to pay off the following purchases. Payments are made at the end of the period.
a. Purchase of a flat-screen TV for $2,410.monthly payments are to be made for one year with interest at 24% per annum, compounded monthly.
b. Purchase of a warerskiling boat for $26,565.quarterly payment are to be made for four years with interest at 8% per annum, compounded quarterly.
c. Purchase of a condomimunm for $65,500, semiannual payment are to be made for 10 years with interest at 10% per annum, compounded semiannually.
Purchase this Solution
Solution Summary
Concepts of annuities are widely used in financial decision making. Solutions to given problems depict the steps to calculate the periodic payment amount for each of the given cases.
Solution Preview
1. Lily Henry wants to buy her son a car for his 21st birthday. If Lily's son is turning 16 today, and interest is 8% per annum, compounded semiannually, what would Lily's semiannual investment need to be if the car will cost $30,000 and the first payment is made six months from today.
Number of investments=n=5*2=10
Amount of investment per semiannual=R=?
Interest rate=i=8%/2=4% per semi annual
Future Value of investment=FV=$30000
Future value of an ordinary annuity is given ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Introduction to Finance
This quiz test introductory finance topics.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)