521 FUURE VA MU If you deposit $10,000 in a bank account that pays 108 interest annually, how much will be in your account after 5 years? 522 RREFEN T YAWE What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually? 523 FINDING THE REOUIRED INIEREYTRATE Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? 5.1TME FOR A UMPSUMTO DOUBIE If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money? 55 TIMETOREACHA FINANCIAL GOAL 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 $2. Text Effects expect to earn 12% annually on the account. How many years will it take to reach your gu... annuity that pays $300 each year? If this was an annulty due, what would its future value be? 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 its present value? its future value? 5810AW A MORITA AIIN ANDEAR You want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over 5 years ( 60 months), and the nominal interest rate will be 12% with Interest pald monthly. What will be the monthly loan payment? What will be the loan's EAR? 59RREFENT ANDEITURE VAWUFS FOR DIFFERENTIRERIODS Find the following values using the equations and then a financial calculator. Compounding/dilscounting occurs annually. a. An initial $500 compounded for 1 year at 6% b. An initual $500 compounded for 2 years at 6% c. The present value of $500 due in 1 year at a discount rate of 6% d. The present value of $500 due in 2 years at a discount rate of 6% Compounding/discounting occurs annually. a. An initial $500 compounded for 10 years at 6% b. An initial $500 compounded for 10 years at 12% c. The present value of $500 due in 10 years at 6% d. The present value of $1,552.90 due in 10 years at 12% and at 6% e. Define present value and illustrate it using a time line with data from Part d. How are present values affected by interest rates? 5211TMFFORA AUMPEUM TODOUBIE How long will it take $200 to double if it earns the following rates? Compounding occurs once a year. a.7\% b. 10% c. 18% d. 100% rate is 7% ? If interestrates doubled to 14%, what would its present value be? 5S1UNFYEMCASUF1OMSTRSAM a. Find the present values of the following cash flow streams at 8% compounded annually. b. What are the PVs of the streams at oss compounded annually?|