Finance Problems: Exam #1
You expect to receive $10,000 at graduation in two years. You plan on investing it at 9 percent until you have $60,000. How long will you wait from now?
From today, you will wait $22.79 years (20.79+2 years)
Imprudential, Inc. has an unfunded pension liability of $415 million that must be paid in 20 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. The relevant discount rate is 5.2 percent. What is the present value of this liability?
$150.57 million
You are scheduled to receive $20,000 in two years. When you receive it, you will invest it for six more years at 6.8 percent per year. How much will you have in eight years?
$29,679.56
You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 80 years from now. What is the present value of your windfall if the appropriate discount rate is 8.4 percent?
$3,152.73
You have just made your first $5,500 contribution to your individual retirement account. Assuming you earn a return of 10% and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing?
$400,897.66 If you wait 10 years: $154,563.40 SO start your retirement plan early.
Your coin collection contains fifty 1972 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2067, assuming they appreciate at an annual rate of 4.3%.
$6,333.82
Suppose you are still committed to owning a $245,000 Ferrari. If you believe your mutual fund can achieve an annual rate of return of 11.2% and you want to buy the car in 9 years (on the day you turn 30), how much must you invest today?
$94,237.34
According to the Census Bureau, in October 2016, the average house price in the United States was $354,900. In October 2000, the average price was $215,100. What was the annual increase in the price of the average house sold.
3.18%
You're trying to save to buy a new $245,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.3% annual interest on its accounts How long will it be before you have enough to buy the car?
37.75 years