FIN 500 WEEK 5
$7015
At an annual interest rate of 7%, the future value of $5000 in five years is closest to:
$3565
At an annual interest rate of 7%, the present value of $5000 received in five years is closest to:
$5962
If the appropriate interest rate is 8%, then present value of $500 paid at the end of each of the next 40 years is closest to:
$48,443
If the current rate of interest is 8% APR, then the future value of an investment that pays $250 per quarter and lasts 20 years is closest to:
$11,000
If the current rate of interest is 8% APR, then the future value of an investment that pays $500 every two years and lasts 20 years is closest to:
$9936
If the current rate of interest is 8% APR, then the present value of an investment that pays $250 per quarter and lasts 20 years is closest to:
$45,762
If the current rate of interest is 8%, then the future value 20 years from now of an investment that pays $1000 per year and lasts 20 years is closest to:
$9818
If the current rate of interest is 8%, then the present value of an investment that pays $1000 per year and lasts 20 years is closest to:
$25,645
Since your first birthday, your grandparents have been depositing $1000 into a savings account on every one of your birthdays. The account pays 4% interest annually. Immediately after your grandparents make the deposit on your 18th birthday, the amount of money in your savings account will be closest to:
$97,331
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. They decide to make deposits into an educational savings account on each of their daughter's birthdays, starting with her first birthday. Assume that the educational savings account will return a constant 7%. The parents deposit $2000 on their daughter's first birthday and plan to increase the size of their deposits by 5% each year. Assuming that the parents have already made the deposit for their daughter's 18th birthday, then the amount available for the daughter's college expenses on her 18th birthday is closest to:
2100
The British government has a consol bond outstanding that pays ₤100 in interest each year. Assuming that the current interest rate in Great Britain is 5% and that you will receive your first interest payment immediately upon purchasing the consol bond, then the value of the consol bond is closest to:
2000
The British government has a consol bond outstanding that pays ₤100 in interest each year. Assuming that the current interest rate in Great Britain is 5% and that you will receive your first interest payment one year from now, then the value of the consol bond is closest to:
80
The British government has just issued a new consol bond that sells for £1000 and pays interest of 8%. The annual interest payment on this bond must be:
$148,780
Use the following information to answer the question(s) below.Your great aunt Matilda put some money in an account for you on the day you were born. This account pays 8% interest per year. On your 21st birthday the account balance was $5033.83.The amount of money that would be in the account if you left the money there until your 65th birthday is closest to:
$1000
Use the following information to answer the question(s) below.Your great aunt Matilda put some money in an account for you on the day you were born. This account pays 8% interest per year. On your 21st birthday the account balance was $5033.83.The amount of money that your great aunt Matilda originally put in the account is closest to:
$87000
Use the information for the question(s) below.Assume that you are 30 years old today and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 7%.The present value (at age 30) of your retirement savings is closest to:
$97,110
Use the information for the question(s) below.Suppose that a young couple has just had their first baby, a daughter, and they wish to ensure that enough money will be available to pay for her college education. Currently, college tuition, books, fees, and other costs, average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year.Assuming that college costs continue to increase an average of 4% per year and that all her college savings are invested in an account paying 7% interest, then the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to:
$25,323
Use the information for the question(s) below.Suppose that a young couple has just had their first baby, a daughter, and they wish to ensure that enough money will be available to pay for her college education. Currently, college tuition, books, fees, and other costs, average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year.Assuming that costs continue to increase an average of 4% per year, tuition and other costs for one year for this student in 18 years when she enters college will be closest to:
$2535
You are considering purchasing a new home. You will need to borrow $250,000 to purchase the home. A mortgage company offers you a 15-year fixed rate mortgage (180 months) at 9% APR (0.75% month). If you borrow the money from this mortgage company, your monthly mortgage payment will be closest to:
$822
You are interested in purchasing a new automobile that costs $35,000. The dealership offers you a special financing rate of 6% APR (0.5%) per month for 48 months. Assuming that you do not make a down payment on the auto and you take the dealer's financing deal, then your monthly car payments would be closest to:
$200,606
You are saving for retirement. To live comfortably, you decide that you will need $2.5 million by the time you are 65. If you assume you are able to do that, and will live 20 more years (until age 85), the amount you can withdraw at the end of each of those years at an interest rate of 5% before your retirement fund is empty is closest to:
$26,100
You are saving for retirement. To live comfortably, you decide that you will need $2.5 million by the time you are 65. Today is your 30th birthday, and you decide, starting today, and on every birthday up to and including your 65th birthday, that you will deposit the same amount into your savings account. Assuming the interest rate is 5%, the amount that you must set aside each year on your birthday is closest to:
$90 million
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last for 17 years. You expect that the drug will produce cash flows of $10 million in its first year and that this amount will grow at a rate of 4% per year for the following 16 years. Once the patent expires, other pharmaceutical companies will be able to produce generic equivalents of your drug and competition will drive any future profits to zero. If the interest rate is 12% per year, then the present value of producing this drug is closest to:
annuity
a stream of N equal cash flows paid at regular intervals
growing anuity
a stream of N growing cash flows, paid at regular intervals
growing perpetuity
a stream of cash flows that occur at regular intervals and grow at a constant rate forever
perpetuity
a stream of equal cash flows that occur at regular intervals and last forever
$2000
consider a growing perpetuity that will pay $100 in one year. each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment. this pattern of payments will continue forever. if the interest rate is 11%, then the value of perpetuity is closet to:
false
t or f we assume that r , g for a growing perpetuity
false
t or f: a dollar in the future is worth more than a dollar today
false
t or f: finding the present value and compounding are the same
false
t or f: not every stream of cash flows can be represented on a timeline
