Purchase Solution

Investment Value and Annual Interest Rates

Not what you're looking for?

Ask Custom Question

I need help with the following question:

Mark and Kate are establishing a fund for their son's college education. What lump sum must they deposit in an account that gives 8% annual interest rate, compounded monthly, in order for them to have $60,000 in the fund at the end of 10 years?

Purchase this Solution
Solution Summary

This solution helps to compute Investment Value.

Solution Preview

Here we have to find the present value

P=present value, F= ...

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Investment, Annual Return and Effective Rate

    164345 Investment questions: nominal annual return, effective annual rate, bond's market price, one-year interest rate expected one year from now, duration of a five-year bond, decrease in the market rates of interest, discount quote, commercial paper

  • Present and future values

    269630 Future Value of investment after one year at different rates of interest. (Present and future values) Assume that you are starting with an investment of $10,000. a.

  • Coupon Rates, Coupon Yields and Maturity

    465883 Coupon Rates, Coupon Yields and Maturity A firm issues a bond at par value. Shortly thereafter, interest rates fall.

  • Problems regarding interest rates

    If you buy a painting for $300 and are able to sell it after 4 years for $500, what was your effective annual interest rate on your investment? c.

  • Present Value of future payments

    Between 16 and 17% c. Between 8 and 9% d. 15% From a financial point of view, which is the best choice, to receive $800 now, or a note that promises $1,000 three years from now? Threeyear interest rates are 7%.

  • Interest Rates and Bond Prices

    599312 Interest Rates and Bond Prices Reply to the following: What is the relationship between Bonds and interest rates?

  • Number of Periods and Percent Annual Interests

    What annual rate of interest must you earn on your investment to cover the cost of your child's college education?

  • semiannual compounding

    340970 semi-annual-compounding Jose Oliva is considering two investment options for a $1500 gift he received for graduation. Both investments have 8% annual interest rates. One offers quarterly compounding; the other compounds on a semiannual basis.

  • Decision Tree Issue and Justification Rationale

    From historical experience, the manager estimates that there is a 20% likelihood that interest rates will increase over the investment period and a 30% chance that rates will decrease.

  • Calculating the Desired Parameters

    If the interest rate this year is 8.4% and the interest rate next year will be 10.4%, what is the future value of $1 after 2 years? What is the present value of a payment of $1 to be received in 2 years? 3.

View More Related Solutions