1. Sue now has $410. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? Suppose you have $1,375 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures? 3. Last year Rocco Corporation's sales were $600 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later? 4. How much would $1, growing at 12.0% per year, be worth after 75 years? Sunpose a State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 3.1%, how much is the bond worth today? 6 How much would $10,000 due in 50 years be worth today if the discount rate were 7.5% 7. Suppose the U.S. Treasury the U.S. Treasury offers to sell you a bond for $687.25. No payments will be made until d matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? 8. Ten years ago, Lucas Inc. earned $0.50 per share. Its earnings this year were $3.60. What was the growth rate in earnings per share (EPS) over the 10-year period? Janice has $5,000 invested in a bank that pays 11.0% annually. How long will it take for her funds to triple? 10. Last year Thomson Inc's earnings per share were $3.50, and its growth rate during the prior 5 years was 10.2% per year. If that growth rate were maintained, how many years would it take for Thomson's EPS to triple? 11. You want to buy a new sports car 3 years from now, and you plan to save $6,700 per year. beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now? 12. What is the PV of an ordinary annuity with 10 payments of $4,400 if the appropriate interest rate is 5.5%? 13. You decided to buy a car. The car price is $36000 and the dealership has a special financing program with 2.5% annual interest rate. If you decide to pay off your car in 5 years what will be your monthly payment? 14. You have a balance of $5,650 on your credit card. You know that the credit card company charges you 16% APR (Annual Percentage Rate). What will be your card balance after 190 days if you do not make any payments during that period? 15. You want to retire after 25 years from today and need to have $3,000,000 when you retire. If you invest your money in an account that pays 10% annual interest how much money should you have in your account today to get to your target? 16. You need to have $2,000,000 cash when you get retired. After your research you find an investment company that guarantees 11% annual interest rate on your investment for 30 years. How much should you pay per month to have the required amount when you retire after 30 years? 17. You invest a lump sum of $180,000 in an account that pays 12% annual interest for 6 years. You also make quarterly payment of $5,000 to the account starting from the date you invest your money. How much will you have at the end of the investment period? 18. Sam is 35 and want to retire when he is 60. He has a lump sum of $205,000 to invest in a company and the financial advisor guaranteed that he would have 2,300,000 cash when he retires. What is the interest rate that the company is promising him to pay
