1.
You have $49,061.69 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $200,000. You expect to earn 9.1% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number.
2.
Present and Future Value of an Uneven Cash Flow Stream
An investment will pay $100 at the end of each of the next 3
years, $300 at the end of Year 4, $600 at the end of Year 5, and
$800 at the end of Year 6. If other investments of equal risk earn
11% annually, what is its present value? Round your answer to the
nearest cent.
$
What is its future value? Round your answer to the nearest
cent.
$
3.
You want to buy a car, and a local bank will lend you $20,000.
The loan would be fully amortized over 3 years (36 months), and the
nominal interest rate would be 12%, with interest paid monthly.
What is the monthly loan payment? Round your answer to the nearest
cent.
$
What is the loan's EFF%? Round your answer to two decimal
places.
%
4.
Year | Cash Stream A | Cash Stream B |
1 | $100 | $300 |
2 | 400 | 400 |
3 | 400 | 400 |
4 | 400 | 400 |
5 | 300 | 100 |
5.
Find the future values of the following ordinary annuities:
6.
To complete your last year in business school and then go through law school, you will need $25,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $25,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 9.57% interest a sum of money that is sufficient to provide the 4 payments of $25,000 each. His deposit will be made today.
7.
You need to accumulate $10,000. To do so, you plan to make
deposits of $1,450 per year - with the first payment being made a
year from today - into a bank account that pays 10.24% annual
interest. Your last deposit will be less than $1,450 if less is
needed to round out to $10,000. How many years will it take you to
reach your $10,000 goal? Round your answer up to the nearest whole
number.
year(s)
How large will the last deposit be? Round your answer to the
nearest cent.
$
8.
1) We have:
Using financial calculator:
PV | $ 49,061.69 |
I/Y | 9.1000% |
FV | $ (200,000.00) |
PMT | $ 5,000.00 |
CPT NPER | 10.29 |
Hence it shall take 10.29 years or 10 years rounded.
2)
Year | Cash Flow | DF | PV |
1 | $ 100.00 | 0.900901 | $ 90.09 |
2 | $ 100.00 | 0.811622 | $ 81.16 |
3 | $ 100.00 | 0.731191 | $ 73.12 |
4 | $ 300.00 | 0.658731 | $ 197.62 |
5 | $ 600.00 | 0.593451 | $ 356.07 |
6 | $ 800.00 | 0.534641 | $ 427.71 |
Total | $ 1,225.77 |
PV=$1,225.77
FV=1225.77*(1.11^6)=$2,292.71
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