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Question: A series of equal semiannual cash flows starts with the first cash flow occurring on January 1, 199land ends with the last cash flow occurring on January 1, 2008. Each cash flow is equal to $128,000. The nominal interest rate is 12% and compounding is semiannual. What single amount on July l, 2001, is equivalent to this cash flow system? The purchase of the car that Joe dreams about can be accomplished by making payments of $300 a month for six years, if the first payment is made on February 1, 1995, and the last payment is made on January 1, 2001. The financing company charges 6% nominal interest rate compounded monthly. Joe wants to be able purchase the car for cash on January 1, 1995, just after he graduates from college. Joe has a job and started making depositing of $275 each month into an account that pays 9% compounded monthly beginning with the first deposit on February 1, 1990. The last deposit is to be made on January 1, 1995. Will Joe have saved up enough money to purchase the car? If not, how much should Joe be saving each month if all other conditions remain the same?

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Accounting Basics, Accounting

Category:- Accounting Basics
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