Question
3.David is planning to enter university when he graduates from high school 7 years from now. He anticipates that he will need $10,000 at the
3.David is planning to enter university when he graduates from high school 7 years from now. He anticipates that he will need $10,000 at the beginning of each of the four university years to pay for tuition fees, and have some pocket money. David has made an arrangement with her parent to do the household chores if they agree to deposits $3,500 at the end of each year for the next 7 years in a bank account paying 8% interest. Will there be enough money in the account for David to pay for her college expenses?
a. $4,846
b. $4,541
c. $1,524
d. $5,207
18.Your finance lecturer, suggests that you should have $1,500,000 in your retirement portfolio before you even THINK about retiring. Recently, you received $200,000 from your wealthy grandmother as a birthday present. How much of the $200,000 must you set aside today if you invest a portion of the money at an annual rate of 7.0% and you wish to retire in 30 years with the amount suggested by your finance lecturer?
a. $149,066
b. $197,051
c. $169,086
d. At an annual rate of return of 7.0%, $200,000 is not a large enough investment to reach the goal amount of $1,500,000 in 30 years.
15.At Crystal Park, a ski chalet costs $250,000 now. Before Josh and Julie retire from successful investment banking careers, inflation is expected to cause this price to increase by 5 percent per year over the next 10 years. How large must an equal annual end-of-year deposit be made into an account paying a 13 percent annual interest rate in order to purchase the ski chalet upon retirement?
a. $ 8,333
b. $22,109
c. $13,572
d. $25,005
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started