Quiz #02 - Results

When you take your job, you decide to start saving for your retirement. You put $5,000/yr into the co’s plan, which averages 8% interest/yr. Five yrs later, you move to another job and start a new plan. You never get around to merging the funds, if the 1st plan continued to earn interest at the rate of 8%/yr for 35 yrs after you stopped making contributions, how much is the account worth?

For items 21-30, when asked about an amount of money (interest, discount, present value, future value, annuity, regular payment) round off your final answers to two decimal place values. When asked about rate of interest, express your final answer as percent rounded off to two decimal place values. When asked about time, round off answers to the nearest year., except when asked for the number of days. 21. Rica obtained a 3-year ₱40 000 discounted loan at 2% simple interest for her online business. Find the discount.22. Rica obtained a 3-year ₱40 000 discounted loan at 2% simple interest for her online business. Find the amount of money Rica received.23. Rica obtained a 3-year ₱40,000 discounted loan at 2% simple interest for her online business. Find the true interest rate.24. Find the future value of a ₱120,000-investment compounded semi-annually at 1.5% for 5 years.25. Find the interest on a ₱120,000-investment compounded semi-annually at 1.5% for 5 years.26. Suppose that you want to…

An entrepreneur needs thousand of dollars to launch the global expansion of his software business. I have agreed to lend him the money today (n=0) at an interest rate of 8% compounded quarterly. I required that the loan be repaid in eight annual payments starting at Year 4 with a $20K payment. Subsequent payments will decrease by $1K each year thereafter. (1) What is the present value of the money being borrowed? (2) Convert your Present Value to Annual Payment.   Use one of the following formulas. Show complete solution.

What is the percentage change in price for a zero coupon bond if the yield changes from 6.5​% to 5.5​%? The bond has a face value of​$1,000 and it matures in 10 years. Use the price determined from the first​ yield, 6.5​%, as the base in the percentage calculation

▼   Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which ​$3000 is to be paid out a year from today with the interest rate equal to 3% is ​$enter your response here. ​(Round your response to the neareast two decimal​ place) Part 3 If a loan is paid after two​ years, and the amount ​$3000 is to be paid then with a corresponding 1​% interest​ rate, the present value of the loan is ​$enter your response here. ​(Round your response to the neareast two decimal​ place)

Today, you invest ₱100,000 into a fund that pays 25% interest compounded annually. Three years later, you borrow ₱50,000 from a bank at 20% annual interest and invest in the fund. Two years later, you withdraw enough money from the fund to repay the bank loan and all interest due on it. Three years from this withdrawal you start taking ₱20,000 per year out of the fund. After five withdrawals, you withdraw the balance in the fund. How much was withdrawn? Note: Draw the cashflow diagram and solve using the formula of annuities

A local bank advertises the following deal: "Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." Calculate the present value of your payments to the bank if the interest rate is 6%. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate is 6%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

For a principal borrowed under %14 nominal interest rate, compounded annually, a bank offers two alternative payment plans in gradient series with 35 years of payment horizon Base payment of $1000 at the end of the first year, and at the end of every next year, the payment size will be increased by $25 compared to the previous year. Base payment of $800 at the end of the first year, and at the end of every next year, the payment size will be increased by a constant $x compared to the previous year. What is x? Choose the closest value to your answer. For a principal borrowed under %14 nominal interest rate, compounded annually, a bank offers two alternative payment plans in gradient series with 35 years of payment horizon Base payment of $1000 at the end of the first year, and at the end of every next year, the payment size will be increased by $25 compared to the previous year. Base payment of $800 at the end of the first year, and at the end of every next year, the payment size…

You place $100 per month into an account that earns 1% per month. Which of the following expressions can be used to calculate the account’s value after 3 years? (a) P = 100(P/A, 1%, 3) (b) F = 100(P/A, 1%, 36)(F/P, 1%, 36) (c) F = 100[(1 + 0.01) n − 1]/0.01 (d) F = 100(F/A, 12.68%, 3)

1. An amortization of a debt is in a form of a gradient series of P10,000 on the first year, P9,500 on the second year, P9,000 on the third year, P8,500 on the fourth year. Determine the future amount of the amortization if interest is 0.11. 2. An amortization of a debt is in a form of a gradient series of P10,000 on the first year, P9,500 on the second year, P9,000 on the third year, P8,500 on the fourth year. Determine the equivalent present worth of the debt if interest is 0.19.

How much should you invest each month in order to have $700,000 if your rate of return is 3.6% compounded monthly and you want to achieve your goal in 40 years?How much interest will you earn?How much should you invest each month in order to have $700,000 if you want to achieve your goal in 20 years?If you deposit the amount you need to achieve your goal in 20 years, how much will your savings be worth after 10 years?

You plan to retire in 35 years and can invest to earn 6.85 percent. You estimate that you will need $82,000 at the end of each year for an estimated 30 years after retirement, and you expect to earn 4.5 percent during those retirement years. How much do you need to set aside at the end of each year to accumulate the money necessary for your retirement? (Assume year-end cash flows.) I will need this much at retirement _____________and will need to set aside ___________per year (at the end of each year.

Assume that your father is now 50 years old and plans to retire after 10 years from now. He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires, 10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @ 10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal?

In 1803, Napoleon sold the Louisiana Territory to the United States for $0.04 per acre. In 2017, the average value of an acre at this location is $10,000.What annual compounded percentage increase in value of an acre of land has been experienced?

Draw the cash flow diagram for this problem and use interest rate with five decimal places. WITHOUT USING EXCEL An individual makes six annual deposits in a savings account starting one year from now that pays interest at a rate of 12% compounded continuously. Ten years after the last deposit, a withdrawal $15,000 per year for 10 years are withdrawn from the account. How much would be the six annual deposits?

A bank is negotiating a loan. The loan can either be paid off as a lump sum of $100,000 at the end of four years, or as equal annual payments at the end of each of the next four years. If the interest rate on the loan is 10%, what annual payments should be made so that both forms of payment are equivalent?

Which of the following statements is CORRECT? The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due. If a loan has a nominal annual rate of 8%, then the effective rate will never be less than 8%. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. The proportion of the payment that goes toward interest on a fully amortized loan increases over time. An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%.

Use future value and present value calculations to determine the following (a) The future value of a $400 savings deposit after eight years at an annual interest rate of 3 percent. (Round time value factor to 3 decimal places and final answer to 2 decimal places.)   (b) The future value of saving $1,800 a year for five years at an annual interest rate of 4 percent. (Round time value factor to 3 decimal places and final answer to 2 decimal places.)  (c) The present value of a $6,000 savings account that will earn 3 percent interest for four years. (Round time value factor to 3 decimal places and final answer to the nearest whole number.)

Which of the following has the highest future value?         A. $100 saved for 2 years at 10 percent interest   B. $130 saved for 2 years at 7 percent interest   C. $120 saved for 2 years at 8 percent interest   D. $110 saved for 2 years at 9 percent interest

An annuity offers to pay £8,200 per year for 20 years, and the nominal annual bank interest rate is 6%, compounded annually (this is not expected to change). A financial advisor offers to sell you this annuity for £100,000. Is this good value?

Your coin collection contains fifty 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.5 percent?

An investor (owner) has an option to purchase a tract of land that will be worth $10,000 in six years. If the value of the land increases at 8% each year, how much should the investor be willing to pay now for this property?

The current interest rate on a 10-year coupon bond (with face value = $1,000 and annual coupon rate = 3.25%) is 1.31%. The buyer of this bond will receive $ _________ (keep one digit after the decimal point) payment from the bond issuer every year before maturity while holding the bond.

As a young graduate, you have plans on buying your dream car in three years. You believe the car will cost P50,000. You have two sources of money to reach your goal of P50,000. First, you will save money for the next three years in a money market fund that will return 8% annually. You plan on making P5,000 annual payments to this fund. You will make yearly investments at the BEGINNING of the year. The second source of money will be a car loan that you will take out on the day you buy the car. You anticipate the car dealer to offer you a 6% APR loan with monthly compounding for a term of 60 months. To buy your dream car, what monthly car payment will you anticipate?a.P483.99b.P540.15c.P627.73d.P652.83

You deposit $100 now, and another $100 at the end of 20 years. The account earns a nominal discount rate of 4% compounded monthly for the first 20 years, and a nominal discount rate of d(52) compounded weekly thereafter. If the account has $700 at the end of 40 years then find this nominal discount rate compounded weekly.

Suppose that an oil well is expected to produce 100,000 barrels of oil during its first year of production. However, its subsequent production (yield) is expected to decrease by 10% over the previous years' production. the oil well has a proven reserves of 1,000,000 barrels. a) Suppose that the price of oil is expected to be $60 per barrel for the next several years. What would be the present worth of the anticipated revenue stream at an interest rate of 12% compounded annually over the next seven years? b) Suppose that the price of oil is expected to start at $60 per barrel during the first year, but to increase at the rate of 5% over the previous year's price. What would be the present worth of the anticipated revenue stream at an interest rate of 12% compounded annually over the next seven years? c) Consider part (b) again. After three year's production, you decide to sell the oil well. what would be a fair price? Note:- Do not provide handwritten solution. Maintain accuracy and…

Cash Flow is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which ​$1000 is to be paid out a year from today with the interest rate equal to 5% is $.​(Round your response to the neareast two decimal​ place) Part 3 If a loan is paid after two​ years, and the amount ​$7000 is to be paid then with a corresponding 7​%interest​ rate, the present value of the loan is $.​(Round your response to the neareast two decimal​ place)