Question

11) Today, Thomas deposited $100,000 in a three-year. 12% CD that compounds quarterly What is the maturity value of the CD? A) $109,270. B) $119,410. C) $309,090. D) $142,576. 12) Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal? A) $43.131. B) $35.000. C) $37,205. D) $35,069. 13) At the end of each quarter, Patti deposits $500 into an account that pays 12% interest compounded quarterly. How much will Patti have in the account in three years? A) $7,096. B) $7,129. C) $8,880. D) $7.213. 14) Shelley wants to cash in her winning lottery ticket. She can either receive eight $100,000 semiannual payments starting today, or she can receive a single-amount payment today based on a 6% annual interest rate. What is the single-amount payment she can receive today? A) $853,020. B) $801,969. C) $744,090. D) $723,028 15) At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000, respectively. What are the (rounded) cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation? A) $38,100. B) $41,556. C) $32,400. D) $39,982. 16) On January 1, 2018, you are considering making an investment that will pay three annual payments of $10,000. The first payment is not expected until December 31, 2020. You are eager to earn 3%. What is the present value of the investment on January 1, 2018? A) $29,135. B) $27,462. C) $26,662 D) $28,286. 4 Page

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

11)

Future value

= Present Value x ( 1 + Rate of interest) ^ Number of periods

When interest rates are compounded quarterly, annual interest rate is divided by 4 and time period in years is multiplied by 4

So, Present Value = $100,000

Rate of interest = 12 / 4 = 3% or 0.03 per quarter

Number of periods = 3 x 4 = 12 quarters

So, Future Value

= $100,000 x ( 1.03 ^ 12)

= $100,000 x 1.42576

= $ 142,576

So, as per above calculations, option D is the correct option