Question

a) At the end of five years you wish to purchase a car for $25,000. You can invest your money at the rate of 5% compounded annually. How much money must you deposit in your investment account today in order to have enough funds to purchase your car? Interest rate - Actual amount of the deposit is: Number of periods - Table used - Factor from table used -

b) You want to buy a business with an annual cash flow of $28,000 for ten years. If you can invest at 5% what would be the maximum purchase price you would be willing to pay today? Interest rate - Purchase price of business: Number of periods - Table used Factor from table used -

c) You can afford to make five annual payments of $2,400 to purchase a new motorcycle. At an annual interest rate of 6% compounded annually, how much money would you need to deposit today make your purchase? Interest rate - Actual amount of the deposit is: Number of periods - Table used - Factor from table used -

d) You would like to purchase your first home in 10 years at a cost of $100,000. You currently have a savings account accumulating interest at the rate of 5.5% compounded annually with a balance of $20,000. How much additional money will you have to deposit today to accumulate the purchase price in ten years? Interest rate - Additional deposit to savings account: Number of periods - Table used - Factor from table used -

Answer #1

a. You bought a car 5 years ago for $30,000. This type of car is
known to depreciate at a compounded annual rate of
8% per year (given normal mileage and wear-and-tear). If your car
depreciated at this rate, how much is it worth today? (Hint: let r
= -0.08 and solve for FV).
c. If you deposit $1000 today in an account earning 10% APR
compounded annually, and you deposit another $1000 next year (at
same rate), and finally...

You are looking to purchase a new car, and you expect to have
annual maintenance costs to keep it running. According to your
calculations, you expect to incur $150 maintenance costs in the
first year and expect the costs to increase by $75 for the next 7
years. You plan to keep the car for 8 years in total. How much
money should you have in your savings account today, so that you do
not have to worry about maintenance?...

Fifteen years ago, you deposited $12,500 into an investment
fund. Five years ago, you added an additional $20,000 to that
account. You earned 8%, compounded semi-annually, for the first ten
years, and 6.5%, compounded annually, for the last five years.
Required:
a) What is the effective annual interest rate (EAR) you would
get for your investment in the first 10 years?
b) How much money do you have in your account today?
c) If you wish to have $85,000 now,...

A. Suppose you invest $83736 today in an account that earns 13%
interest annually. How much money will be in your account 7 years
from today?
B. What is the value today of single payment of $36665, 18 years
from today if the value is discounted at a rate of 19%?
C. How many years would it take an investment of $172 to grow to
$18096 at an annual rate of return of 15%?
D. How much money would you...

Q1) Suppose you invest $66,624 today in an account that earns
13.00% interest annually. How much money will be in your account 11
years from today?
Q2) What is the value today, of single payment of $51,252 made
13 years from today, if the value is discounted at a rate of
04.00%?
Q3) How many years would it take an investment of $333 to grow
to $10,789 at an annual rate of return of 11.00%?
Q4) How much money would...

Fifteen years ago, you deposited $12,500 into an investment
fund. Five years ago, you added an additional $20,000 to that
account. You earned 8%, compounded semi-annually, for the first ten
years, and 6.5%, compounded annually, for the last five years.
Required: 1. a) What is the effective annual interest rate (EAR)
you would get for your investment in the first 10 years?
2. b) How much money do you have in your account today?
3. c) If you wish to...

You are saving for a car that you plan to purchase in five
years. You plan to put $3,000 in savings (which earns 10%,
compounded annually) at the end of each year until then. How much
will you have saved for the car at the end of the five years?
(Future Value of $1, Present Value of $1, Future Value Annuity of
$1, Present Value Annuity of $1.) (Use appropriate factor from the
PV tables. Round your final answer to...

Q3) How many years would it take an investment of $333 to grow
to $10,789 at an annual rate of return of 11.00%?
Q4) How much money would you need to deposit today at 23.00%
annual interest compounded monthly to have $26,802 in the account
after 13 years?
Q5) If you deposit $729 into an account paying 15.00% annual
interest compounded quarterly, how many years until there is
$37,847 in the account?
Q6) If you deposit $21,114 at 06.00% annual...

You would like to save annually for buying a car 6 years from
today. Suppose the first deposit is made today and the last deposit
will be made 5 years from now. Assume the car will cost you $30,000
and your deposits earn you interest at 6% p.a, compounded
annually.
(a) What is your annual deposit amount?
(b) Instead of making annual deposits, you would like to make
your deposit monthly and the bank is happy to pay your interest...

You wish to buy a car for $25,000. The dealer offers you a
4-year loan with 2% interest. About what are your monthly payments?
$539.27 $553.36 $542.38 $547.71 Bank A has a 1 year loan for 6%
compounded annually. Bank B has a loan for 5.9% compounded monthly.
Which loan would you select for your business? Bank A: 6% nominal
interest is a better rate than Bank B nominal interest. Bank B:
5.9% nominal interest is a better rate than...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 10 minutes ago

asked 23 minutes ago

asked 27 minutes ago

asked 45 minutes ago

asked 46 minutes ago

asked 48 minutes ago

asked 54 minutes ago

asked 55 minutes ago

asked 56 minutes ago

asked 57 minutes ago

asked 59 minutes ago

asked 1 hour ago