Question

WEEK 4 FIN CORP (ASSNGMNET)

SHOW YOUR CALCULATIONS FOR #7-#20.

You have the option of performing calculations manually BUT ARE STRONGLY ENCOURAGEDto use a financial calculator or spreadsheet. Either way, you must specify what is being calculated to earn credit:

1,If you are earning a salary of $42,000 in 2018 and expect to receive 4% raises per annum on January 1, what do you anticipate your salary will be in 2027?

2.What is the future value of $5,000 invested for 14 years at 7.5% compounded annually?

3.You hope to buy your dream car 5 years from now. Today, that car costs $68,000 but you expect the price to increase by an average of 4% per year over the next five years. How much will your dream car cost by the time you are ready to buy it?

4.Your grandmother invested a lump sum for you 25 years ago earning 6.5% interest per year over that time. Today, she gave you the proceeds of that investment which is now worth $86,900. How much did she originally invest?

5.Asendia USA has an unfunded pension liability of $6 million that must be paid in 20 years. The relevant annual discount rate is 6.5%. What is the present value of this liability?

6.You would like to give your 3-year old daughter $60,000 towards her college education 15 years from now. How much money must you set aside today for this purpose if you can think you can earn 7% per year on your investments?

7. Fifteen years ago, you put away $5,000. Today, that investment is now worth $16,535. What is the average annual rate of return you earned on your investment?

8.You just won first place in a CUNY essay writing contest, and as your prize, you will receive $500 a month each month for the next 6 years( NOT$6,000 per year but $500 per month). If you can earn 7.5% per year on your money, what is the total prize worth to you today?

9.Your spouse needs a car and you believe you can afford no more than $350 a month for a 5-year car loan. If the interest rate on this loan is 3.75% percent, what is the maximum you can afford to borrow to purchase this car?

NO SCREEN SHOTS OR IMAGES OF RESPONSE. PLEASE TYPE YOUR ANSWER OR UPLOAD DOCUMENT IF REQUIREMENTS MENTIONED ABOVE ARE NOT MET I WILL GIVE A NEGATIVE RATING

Answer 1

Answer to Question 7:

Amount deposited = $5,000
Value of deposit amount = $16,535
Period = 15 years
Let annual interest rate be i%

$5,000 * (1 + i)^15 = $16,535

Using financial calculator:

N = 15
PV = -5000
PMT = 0
FV = 16535

I = 8.3%

So, annual rate of return is 8.30%

Answer to Question 8:

Monthly Payment = $500
Annual Interest Rate = 7.5%
Monthly Interest Rate = 0.625%
Period = 6 years or 72 months

Present Value of Prize = $500 * PVIFA(0.625%, 72)

Using financial calculator:

N = 72
PMT = 500
I = 0.625%
FV = 0

PV = 28,918.26

So, present value of prize is $28,918.26

Answer to Question 9:

Monthly Payment = $350
Annual Interest Rate = 3.75%
Monthly Interest Rate = 0.3125%
Period = 5 years or 60 months

Value of Car = $350 * PVIFA(0.3125%, 60)

Using financial calculator:

N = 60
PMT = 350
I = 0.3125%
FV = 0

PV = 19,121.59

So, you can afford to buy a car costing $19,121.59