Question
1. Jane wants to set aside funds to take an around the world cruise in four years. Assuming that Jane has $20,000 to invest today
1. Jane wants to set aside funds to take an around the world cruise in four years. Assuming that Jane has $20,000 to invest today in an account expected to earn 6% per annum, how much will she have to spend on her vacation?
2. Lucy and Fred want to begin saving for their toddler's college education. They estimate that they will need $200,000 in fifteen years. If they are able to earn 5% per annum, how much must be deposited at the end of each of the next fifteen years to fund the education?
3. On January 1, 2020 Lance Company issued five-year bonds with a face value of $1,000,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%. (Market rate is 10%.) Calculate the issue price of the bonds.
4. Korman Company wishes to accumulate $1,000,000 by May 1, 2029 by making 10 equal annual deposits beginning May 1, 2020 to a fund paying 9% interest compounded annually. What is the required amount of each deposit?
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