Question
1.You have $50,000 in an account, which pays 5% compound interest. How much additional dollars of interest would you earn over four years if you
1.You have $50,000 in an account, which pays 5% compound interest. How much additional dollars of interest would you earn over four years if you moved the money to an account earning 6%?
2.What is the future value at the end of year 4 of the following set of cash flows? Assume an interest rate of 3.5%
Year 1 $5000
Year 2 -$1000
Year 3 $1500
Year 4 $1700
3.A. you have just won the lottery. You and your heirs will receive $25,000 forever beginning one year from now. what is the present value of your winnings at a discount rate of 7%?
b. what would be the present value of the lottery win if the first payment were received today?
4.Wolf & Co. is planning to save some money to buy new equipment. The company is opening an account today with a deposit of $15,000 and expects to earn 4% interest. After 3 years, it wants to add an additional $50,000 to the account if the account continues to earn 4% interest, how much money will the company have in its account five years from now?
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