Question
5) You have $42,180.53 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your
5) You have $42,180.53 in a brokerage account, and you plan to deposit an additional $5,000 at
the end of every future year until your account totals $250,000. You expect to earn 12%
annually on the account. How many years will it take to reach your goal?
6)What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this
were an annuity due, what would its future value be?
7)An investment will pay $100 at the end of each of the next 3 years, $200 at the end
of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other
investments of equal risk earn 8% annually, what is this investment's present value?
Its future value?
32) Anne Lockwood, manager of Oaks Mall Jewelry, wants to sell on credit, giving customers
3 months to pay. However, Anne will have to borrow from her bank to carry the accounts
receivable. The bank will charge a nominal rate of 15% and will compound monthly.
Anne wants to quote a nominal rate to her customers (all of whom are expected to pay on
time) that will exactly offset her financing costs. What nominal annual rate should she
quote to her credit customers?
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