Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / You are only attempt and are not grounds for Special • You do not need to use Proctor to attempt this assessment task
You are only attempt and are not grounds for Special • You do not need to use Proctor to attempt this assessment task. The test has an automatic timer of 60 minutes. There is a timer on the right hand side panel. All Question 6 Jacqui is a wealthy art collector that has decided to endow the Louvre, which is her favourite art museum. She will need to establish funds for the endowment which would provide it with $2.5 million at the end of each year for acquisitions into perpetuity Jacqui will give the endowment upon her 50th birthday, which is ecctly 10 years from today. She plans to accumulate the endowment by making annual end-of-year deposits into an account. The rate of interest is expected to be alt future periods. How much must Jacqui deposit each year to accumulate the required amount? O $2.165.242.01 $3,161,164.95 14644.961.96 51,395.986.14 55.461.164.93 Josh Feyenberg.pdf
Question 5 Mork and Mindy wish to buy their first home. Westpac will charge them an interest rate of 3.72% p.a. compounding monthly on a loan with monthly repayments fa term of 20 years. If the most they can afford to repay each month is $3,900, what is the greatest amount of money they could borrow now? O $661,576,74 $652,092.25 $659,532.19 $648.361.76 None of the options Frytenberg.pdf
Jacqui wants to receive $ 2.5 million at the end of each year into perpetuity after 10 years, by making investment at the end of each year for next 10 years .
Here, we will first calculate Present value of future payments:
P10 = Yearly Annuity Received/ Interest Rate
P10 signifies present value of payment, but it is the present value after 10 years. It is the investment amount that we have to make.
P10 = 2500000/0.06
=$ 41,6,66,666.67
Now to accumulate $ 41,6,66,666.67 after 10 years, yearly amount to be deposited at the end of each year @6 % is as follow:
$ 41,6,66,666.67 = Yearly deposit * PVAF(r%, n year)
PVAF(r%, n year) is the annuity factor where r% is rate of interest and n is no.of years.
PVAF(6%, 10 years) = (1+r%)n-1/ (r% * (1+r%)n)
= (1+0.06)10-1 / (0.06 * (1+0.06)10)
= 1.79085-1/ (0.06*1.79085)
= 0.79085/ 0.107451
= 7.36
Yearly Deposit = 41,6,66,666.67/7.36009
= $ 5661162.66 approx
Therefore answer is $ 5661164.93
Answer to Q5. Amount that can be borowed is as follow:
Loan Amount = Monthly repayment * PVAF(r%, n period)
PVAF(r%, n year) is the annuity factor where r% is rate of interest which is converted to monthly rate and n is no.of months.
PVAF(3.72%, 240 months) = 1+r%)n-1/ (r% * (1+r%)n)
= (1+0.31%)240-1 / (0.0031 * (1+0.0031)240)
= 2.101915723-1/ (0.0031*2.101915723)
= 1.101915723/ 0.006515939
= 169.1108
Now
Loan Amount = 3900*169.1108
= $ 659532.16 approx
