Ch. 4 & 5 HW
You want to buy a house and will need to borrow $220,000. The interest rate on your loan is 5.47 percent compounded monthly and the loan is for 20 years. What are your monthly mortgage payments?
$1,509.63
You have just started a new job and plan to save $5,100 per year for 38 years until you retire. You will make your first deposit in one year. How much will you have when you retire if you earn an annual interest rate of 9.68 percent?
$1,711,472.57
What is the present value of $12,350 to be received 4 years from today if the discount rate is 5 percent?
$10,160.38
A company has a pension liability of $460,000,000 that it must pay in 29 in years. If it can earn an annual interest rate of 4.2 percent, how much must it deposit today to fund this liability?
$139,506,351.81
You need to have $34,250 in 17 in years. You can earn an annual interest rate of 4 percent for the first 5 years, 4.6 percent for the next 4 years, and 5.3 percent for the final 8 years. How much do you have to deposit today?
$15,557.51
You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $2,800 today and both accounts have an annual interest rate of 7 percent. How much more interest will you receive in the 10th year in the account that pays compound interest?
$164.34
You are in talks to settle a potential lawsuit. The defendant has offered to make annual payments of $28,000, $32,000, $66,000, and $99,000 to you each year over the next four years, respectively. All payments will be made at the end of the year. If the appropriate interest rate is 3.6 percent, what is the value of the settlement offer today?
$202,137.90
One year ago, the Jenkins Family Fun Center deposited $4,300 into an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,100 to this account. They plan on making a final deposit of $8,300 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a rate of return of 6 percent?
$23,340.91
Assuming an interest rate of 7.1 percent, what is the value of the following cash flows four years from today? Year ; Cash Flow 1 ; $3,425 2 ; 4,380 3 ; 6,310 4 ; 8,485
$24,474.60
You need to have $35,000 for a down payment on a house in 7 years. If you can earn an annual interest rate of 4.5 percent, how much will you have to deposit today?
$25,719.00
You just purchased two coins at a price of $250 each. Because one of the coins is more collectible, you believe that its value will increase at a rate of 6.4 percent per year, while you believe the second coin will only increase at 5.8 percent per year. If you are correct, how much more will the first coin be worth in 10 years?
$25.56
What is the future value of $3,250 per year for 32 years at an interest rate of 7.23 percent?
$374,678.72
Gerritt wants to buy a car that costs $27,750. The interest rate on his loan is 5.41 percent compounded monthly and the loan is for 6 years. What are his monthly payments?
$452.21
Beatrice invests $1,340 in an account that pays 5 percent simple interest. How much more could she have earned over a 6-year period if the interest had been compounded annually?
$53.73
Today, your dream car costs $55,600. You feel that the price of the car will increase at an annual rate 2.5 percent. If you plan to wait 5 years to buy the car, how much will it cost at that time?
$62,906.30
Myca Corp. has a project with the following cash flows. What is the value of the cash flows today assuming an annual interest rate of 9.7 percent? Year ; Cash Flow 1 ; $1,760 2 ; 2,210 3 ; 2,535 4 ; 2,545
$7,118.44
Your parents are giving you $175 a month for 4 years while you are in college. At an interest rate of .42 percent per month, what are these payments worth to you when you first start college?
$7,593.04
We Pay Insurance Co. will pay you $1,200 each quarter for 28 years. You want to earn a minimum interest rate of .89 percent per quarter. What is the most you are willing to pay today for these payments?
$84,850.85
What is the effective annual rate for an APR of 11.80 percent compounded quarterly?
12.33%
Your credit card company charges you 1.24 percent per month. What is the EAR on your credit card?
15.94%
You currently have $6,900. First United Bank will pay you an annual interest rate of 8, while Second National Bank will pay you an annual interest rate of 9.3. How many fewer years must you wait for your account value to grow to $27,400 at Second National Bank?
2.41 years
One year ago, you invested $3,400. Today, it is worth $4,150. What rate of interest did you earn?
22.06 percent
Fifth Fourth National Bank has a savings program which will guarantee you $15,500 in 13 years if you deposit $80 per month. What APR is the bank offering you on this savings plan?
3.25%
A prominent alumnus of your university has just donated $2,700,000 to fund a scholarship that will distribute $101,000 per year forever beginning in one year. For this to be true, what rate of return is expected on the donation?
3.74%
You feel that you will need $3.1 million in your retirement account and when you reach that amount, you plan to retire. You feel you can earn an APR of 10.8 percent compounded monthly and plan to save $440 per month until you reach your goal. How many years will it be until you reach your goal and retire?
38.74 years
Bob has been investing $5,500 in stock at the end of every year for the past 13 years. If the account is currently worth $125,700, what was his annual return on this investment?
8.93%
