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ECON 2560 Chapter Notes - Chapter 1: Yield Curve, Regional Airline, United States Treasury Security

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School
University of Guelph
Department
Economics
Course
ECON 2560
Professor
Nikola Gradojevic

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Document Summary

You invest in an account paying simple interest at the rate of 6% per year. How much will the account be worth in 5 years?you earn interest only on the original investment, every year: example: you invest in an account paying compound interest at the rate of 6% per year. In order to create an endowment which pays ,000 per year, forever, how much. If the first perpetuity payment will not be received until four years from today, how much money needs to be set aside today: you are purchasing a car. You are scheduled to make 3 annual installments of ,000 per year, with the first payment one year from now. If the interest rate on one year government bonds is 5. 0% and the inflation rate is. 10. suppose you earn 1% per month on invested today.

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Related Questions

Robertson Inc. wishes to set aside lump sum money to withdraw from and invest in automating parts of its business over the next 5 years. This money is expected to earn compound interest at the rate of 10% per year. The following are the expected dates of withdrawals:
Year 1: $40,000
Year 2: No withdrawal
Year 3: $25,000
Year 4: $50,000
Year 5: $10,000.
How much money should Robertson Inc. deposit today to be able to withdraw the increments listed above? Also, make a table to show, on a year by year basis, if your calculated amount is correct. The table should show the interest earned, the withdrawals made and the balance left in the account.

Labor costs have been increasing at an annual rate of 10%. A firm wishes to set aside funds to cover labor costs for the next 5 years. Determine how much must be set aside today if the money will be invested and will earn interest at a rate of 10%. The labor cost next year will be $51,040.

2. Robertson Inc. wishes to set aside lump sum money to withdraw from and invest in automating parts of its business over the next 5 years. This money is expected to earn compound interest at the rate of 10% per year. The following are the expected dates of withdrawals:
Year 1: $40,000
Year 2: No withdrawal
Year 3: $25,000
Year 4: $50,000
Year 5: $10,000.
How much money should Robertson Inc. deposit today to be able to withdraw the increments listed above? Also, make a table to show, on a year by year basis, if your calculated amount is correct. The table should show the interest earned, the withdrawals made and the balance left in the account.