Question

Answer each of the following independent questions. Ignore
personal income taxes.

Use Appendix A for your reference. **(Use appropriate
factor(s) from the tables provided.)**

**Required:**

Suppose you invest $4,500 in an account bearing interest at the rate of 14 percent per year. What will be the future value of your investment in five years?

Your best friend won the state lottery and has offered to give you $12,000 in four years, after he has made his first million dollars. You figure that if you had the money today, you could invest it at 12 percent annual interest. What is the present value of your friend’s future gift?

In four years, you would like to buy a small cabin in the mountains. You estimate that the property will cost you $72,500 when you are ready to buy. How much money would you need to invest each year in an account bearing interest at the rate of 6 percent per year in order to accumulate the $72,500 purchase price?

You have estimated that your educational expenses over the next four years will be $15,000 per year. How much money do you need in your account now in order to withdraw the required amount each year? Your account bears interest at 10 percent per year.

Answer #1

Future value=Principal (1+Interest rate)^Duration | ||||||||||||

Future value=4500*(1+0.14)^5=4500*1.925=8664 | ||||||||||||

Present value =12000*[(1/1.12)^4]=12000*0.6355=$7626 | ||||||||||||

Money need to invest in each year=Property cost/Present value of interest rate for 4 years=72500/3.465=$ 20923.52 | ||||||||||||

Present value of future payments: | ||||||||||||

Year | Required Amount |
PV @ 10% | Present value | |||||||||

1 | 15000 | 0.909091 | 13636.36 | |||||||||

2 | 15000 | 0.826446 | 12396.69 | |||||||||

3 | 15000 | 0.751315 | 11269.72 | |||||||||

4 | 15000 | 0.683013 | 10245.2 | |||||||||

47547.98 | ||||||||||||

Total amount need to be in the account=$47547.98 | ||||||||||||

Scenario 1. Suppose you invest a sum of $ 5000 in an
interest-bearing account at the rate of 10 % per year. What will
the investment be worth six years from now? (Round your answer to
the nearest whole dollar.) In six years the investment will be
worth _______.
Scenario 2. How much would you need to invest now to be able to
withdraw $ 11,000 at the end of every year for the next 20 years?
Assume an 8...

Problem 5 [Following questions are independent of each
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a) If the inflation is 8% per year and the market interest rate
paid by the bank is 12% per year, how much would be your real
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b) Suppose that you rented your business property to receive the
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then-current money for 5 years. If the annual inflation rate is...

You plan on buying yourself a retirement cabin in the Rocky
Mountains 40 years from now. At an interest rate of 5 percent per
year, how much must you invest each year (equal annual amounts
beginning next year) to have $150,000 in your cabin fund in 40
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please solve using excel

PLEASE SHOW WORK FOR THE QUESTIONS BELOW
Question 1
If you invest $14,441 today at an interest rate of 5.99 percent,
compounded daily, how much money will you have in your savings
account in 3 years? Round the answer to two decimal
places.
Question 2
To what amount will the following investment accumulate?
$38,756, invested today for 19 years at 10.42 percent, compounded
monthly. Round the answer to two decimal places.
Question 3
You placed $4,067 in a savings account...

You plan to retire at age 40 after a highly successful but short
career. You would like to accumulate enough money by age 40 to
withdraw $232,000 per year for 40 years. You plan to pay into your
account 15 equal installments beginning when you are 25 and ending
when you are 39. Your account bears interest of 10 percent per
year.
Use Appendix A for your reference. (Use appropriate
factor(s) from the tables provided.)
Required:
How much do you...

Show your calculations and answer the following questions
- An investment will pay you $120 in one year and $200 in two
years. Calculate the present value of these cash flows if the
interest rate is 4%. -Suppose you invest $1000 in an account paying
6% interest per year. What is the balance in the account after 3
years? Calculate how much of this balance corresponds to “interest
on interest” - If Brandon receives 6 percent interest rate on his...

Show your calculations and answer the following
questions
- An investment will pay you $120 in one year and $200 in two
years. Calculate the present value of these cash flows if the
interest rate is 4%.
-Suppose you invest $1000 in an account paying 6% interest per
year. What is the balance in the account after 3 years? Calculate
how much of this balance corresponds to “interest on interest”
- If Brandon receives 6 percent interest rate on his...

1. You want to be able to withdraw $35,000 each year for 25
years. Your account earns 5% interest.
a) How much do you need in your account at the beginning?
b) How much total money will you pull out of the account?
c) How much of that money is interest?
2. You want to buy a $23,000 car. The company is offering a 2%
interest rate for 48 months (4 years). What will your monthly
payments be?
3. Suppose...

*PLEASE ANSWER ALL QUESTIONS
Problem 1: A credit car company wants your business. If you use
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a savings account that earns 5% per year. If you spend on average
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You need to accumulate $75,706 for your son's education. You
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Round the answer to two decimal places.
3b3.
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