Question

1. Sue is scheduled to receive a one-time payment of $48,000 from a trust in exactly 36 years. At an interest rate of 7% compounded annually, what is the present value of the payment?

2. A bank is offering a certificate of deposit (CD) that pays interest of 5.3% per year, compounded quarterly over a 7-year period. It is your goal to have exactly $72,000 in the account at the end of the investment period. How much must be deposited today to meet the goal?

3. You have won a lottery prize that will pay you $605,000 per year for the next 26 years with the first payment coming one year from today. At a rate of 7.7%, compounded annually, what is the present value of the cash prize?

4. Suppose that you just inherited $73,000 and decide to invest the money. You choose to invest in Tesla stock because you estimate that the stock will earn a 13% return per year over the next 14 years. If you invest the money today in Tesla stock, and the 13% return per year is realized, what would be your balance at the end of the 14 years?

5.

You have been offered an investment, which will triple your money in 13 years. What exact annual rate of return are you being offered?

Enter your answer in decimal rounded to four decimal places. As an example, you would enter 1.146% as 0.0146.

6. An investment offers an annual return of 7% per year. If you invest $28,000 today, how many years will it will take for the investment to grow to a value of $114,000?

7. You are buying a new home that costs $483,000 using a 25-year fixed rate loan at an annual interest rate of 3.05% with monthly payments. What will be the monthly loan payment?

8.

An investor is evaluating an investment that pays the following stream of cash flows over the next four years:

• Year 1: $24,000;
• Year 2: $55,000;
• Year 3: $88,000;
• Year 4: $89,000;

At an interest rate of 10.9%, what the present value of the stream of cash flows?

Answer 1

(1) Future Value of Payout = $ 48000, Time to Payout = 36 years and Interest Rate = 7 %

Present Value = 48000 / (1.07)^(36) = $ 4201.702

NOTE: Please raise separate queries for solutions to the remaining unrelated questions, as one query is restricted to the solution of only one complete question with up to four sub-parts.