Fiance Problems

What is the effective annual rate if a bank charges you 8.25 percent compounded quarterly?

8.51%

Trish receives $450 on the first of each month. Josh receives $450 on the last day of each month. Both Trish and Josh will receive payments for the next four years. At a 9.5 percent discount rate, what is the difference in the present value of these two sets of payments?

$141.80

Your father invested a lump sum 26 years ago at 4.25 percent interest. Today he gave you the proceeds of that investment which totaled $51, 480. 79. How much did your father originally invest?

$17444.86

A first round draft choice quarterback has been signed to a three year $25 million contract. The details provide for an immediate bonus of $2 million. The player is to receive j$5 million in salary at the end of the first year, $8 million the next, $10 million at the end of the final year. Assuming a 15% discount rate what is this package worth?

$18,972,137.75

This morning, you borrowed $150,000 to buy a house. The mortgage rate is 7.35 percent. The loan is to be repaid in equal month payments over 20 years. The first payment is due one month from today. How much of the second payment applies to the principal balance? (assume each month is equal to 1/12 of a year).

$277.61

Look at packet for number 8

33.62%

Today, you are retiring. You have a total of $411,016 in your retirement savings and have the funds invested such that you expect to earn an average of 7.10 percent, compounded monthly, on this money throughout your retirement years. You want to withdraw $2,500 at the beginning of every month, starting today. How long will it be until you run out of money?

48.19 years

What is the interest rate charged per period multiplied by the number of period per year called?

Annual percentage rate

See packet for number 12

C

You just acquired a mortgage in the amount of $249,500 at 6.75 percent interest , compounded monthly. Equal payments are to be made at the end of each month for thirty years. How much of the 1st loan payment is interest? How much of the 17th payment is principal?

$1,403.43 $234.99

Crandall Oil has total sales of $1349800 and costs of $903500. Depreciation is $42,700 and the tax rate is 34 percent. The firm does not have any interest expense. What is operating cash flow?

$309, 076

You are considering an annuity which costs $160,000 today. The annuity pays $17,500 a year at an annual interest rate of 7.5 percent. What is the length of the annuity?

16 years

You just borrowed $34,000 to buy a car. You will pay back this loan with monthly payments of $700 for 8 years. What is the annual interest rate on this loan?

19.44%

Your credit card company charges you 1.65 percent interest per month. What is the annual percentage rate on your account?

19.8%

The Pawn Shop loans money at an annual rate of 23 percent and compounds interest weekly. What is the actual rate being charged on these loans?

25.80%

On your ninth birthday, you recieved $300 which you invested at 4.5 percent interest, compounded annually. Your investment is now worth $756. How old are you today

30

Your firm has total assets of $4900, fixed assets of $3,200, long term debt of $2,900 and short term debt of $1,400. What is the amount of net working capital?

300

You are borrowing $17,800 to buy a car. The terms of the loan call for monthly payments for 5 years at 8.6 percent interest. What is the amount of each payment?

$366.05

Your grandmother is gifting you $125 a month for four years while you attend college to earn your bachelor's degree. At a 6.5 percent discount rate, what are these payments worth to you on the day you enter college?

$5270.94

Net new borrowing for firm A was -$4699(the firm increased their long-term debt over the year). The interest paid was $6430. What is the amount of the cash flow to creditors?

$11129

You want to be a millionaire when you retire in 40 years. How much will you have to save per month if you can earn 11% rate of return? See hint on sheet

$116.28

Nielson Auto Parts had beginning net fixed assets of $218470 and ending net fixed assets of $209,411. During the year, assets with a combined book value of $6943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending?

$33, 763

Western Bank offers you a $21,000, 9 year term loan at 8 percent annual interest. What is the amount of your annual loan payment?

$3361.67

Today you earn a salary of $36000. What will be your annual salary twelve years from now if you earn annual raises of 3.6 percent?

$55032.54

You have $50 in a bank account and deposit an additional $10 per month for 5 years. The annual interest rate is 10% compounded monthly. How much will we have in the account after 5 years?

$856.63

You invested $1400 in an account that pays 5 percent simple interest. How much more could you have earned over a 20 year period if the interest had compounded annually?

$914.62

You are prepared to make monthly payments of $290 into an account that pays 7% interest compounded monthly. How many payments will you have made when your account balance reaches $20,000? See hint on sheet

58.13 payments

Andre's Bakery has sales of $687,000 with costs of $492,000. Interest expense of $26,000 and depreciation is $42,000. The tax rate is 35 percent. What is the net income?

82,550

Businesses sometimes advertise that they will give you $100 for trying a product. What they mean is that they will give you a savings certificate that will pay you $100 in 25 years. If the interest rate is 10% per year, how much are they giving you today?

9.23

You would like to retire in 50 years as a millionaire. If you have $10,000 today, what rate of return do you need to achieve your goal?

9.65%

Ten years ago, Jackson Supply set aside $130,000 in case of a financial emergency. Today, that account has increased in value to $330,592. What rate of interest is the firm earning on this money?

9.78%

You are the beneficiary of a life insurance policy. The insurance company informs you that you have tow options for receiving the insurance proceeds. You can recieve a lump sum of $200,000 today or receive payments of $1400 a month for 20 years. You can earn 6 percent on your money. Which option should you take and why?

You should accept the $200,000 because the payments are only worth $195413 to you today