62.

Your father helped you start saving $20 a month beginning on your fifth birthday. He always made you deposit the money into your savings account on the first day of each month just to "start the month out right." Today completes your 17th year of saving and you now have $6,528.91 in this account. What is the rate of return on your savings?

A.	5.15 percent
B.	5.30 percent
C.	5.47 percent
D.	5.98 percent
E.	6.12 percent

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Basic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Section: 6.2 Valuing Level Cash Flows: Annuities and Perpetuities Topic: Time value of money

63.

Today, you turn 23. Your birthday wish is that you will be a millionaire by your 40th birthday. In an attempt to reach this goal, you decide to save $75 a day, every day, until you turn 40. You open an investment account and deposit your first $75 today. What rate of return must you earn to achieve your goal?

A.	7.67 percent
B.	8.09 percent
C.	9.90 percent
D.	10.06 percent
E.	10.54 percent

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Basic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Section: 6.2 Valuing Level Cash Flows: Annuities and Perpetuities Topic: Time value of money

64.

You just settled an insurance claim. The settlement calls for increasing payments over a five-year period. The first payment will be paid one year from now in the amount of $7,000. The following payments will increase by 3.5 percent annually. What is the value of this settlement to you today if you can earn 6.5 percent on your investments?

A.	$36,408.28
B.	$31,063.79
C.	$42,023.05
D.	$34,141.14
E.	$28,008.16

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Basic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Section: 6.2 Valuing Level Cash Flows: Annuities and Perpetuities Topic: Present value - annuity

65.

Your grandfather left you an inheritance that will provide an annual income for the next 20 years. You will receive the first payment one year from now in the amount of $16,500. Every year after that, the payment amount will increase by 5 percent. What is your inheritance worth to you today if you can earn 7.5 percent on your investments?

A.	$247,750
B.	$286,667
C.	$231,211
D.	$354,612
E.	$308,974

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Basic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Section: 6.2 Valuing Level Cash Flows: Annuities and Perpetuities Topic: Present value - annuity

66.

You just won the magazine sweepstakes and opted to take unending payments. The first payment will be $21,500 and will be paid one year from today. Every year thereafter, the payments will increase by 2.5 percent annually. What is the present value of your prize at a discount rate of 7.9 percent?

A.	$350,000
B.	$348,409
C.	$398,148
D.	$291,006
E.	$346,900

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Basic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Section: 6.2 Valuing Level Cash Flows: Annuities and Perpetuities Topic: Perpetuities

67.

A wealthy benefactor just contributed to your colleges scholarship program. This gift will provide $20,000 in scholarships next year with that amount increasing by 2 percent annually thereafter.. If the discount rate is 6.5 percent, what is the current value of this perpetual gift?

A.	$307,700
B.	$350,000
C.	$525,000
D.	$444,444
E.	$550,750

Please show explanation for all solutions