Question
1. (Future value of an annuity) In 10 years you are planning on retiring and buying a house in Oviedo, Florida. The house you are
1. (Future value of an annuity) In 10 years you are planning on retiring and buying a house in Oviedo, Florida. The house you are looking at currently costs $100,000 and is expected to increase in value each year at a rate of 5 percent. Assuming you can earn 9 percent annually on your investments, how much must you invest at the end of each of the next 10 years to be able to buy your dream home when you retire?
a. If the house you are looking at currently costs $100,000 and is expected to increase in value each year at a rate of 5 percent, what will the value of the house be when you retire in 10 years? $(Round to the nearest cent.) ANSWER:
b. Assuming you can earn 9 percent annually on your investments, how much must you invest at the end of each of the next 10 years to be able to buy your dream home when you retire? $(Round to the nearest cent.) ANSWER:
2. (Bondholders' expected rate of return) You purchased a bond for $925. The bond has a coupon rate of 12 percent, which is paid semiannually. It matures in 11 years and has a par value of $1,000. What is your expected rate of return? Your expected rate of return is %. (Round to two decimal places.) ANSWER:
3. (Loan amortization) On December 31, Son-Nan Chen borrowed $95,000, agreeing to repay this sum in 23 equal end-of-year installments and 17 percent interest on the declining balance. How large must the annual payments be? The amount of the annual payments must be $ (Round to the nearest cent.) ANSWER:
PLEASE ANSWER EACH QUESTION CORRECTLY AND FULLY!!!
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