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8 Question 6-Time value of money (18 marks) 79 a) Jozy Altidore invested $6,000 at 5% annual interest, and left the money invested without
8 Question 6-Time value of money (18 marks) 79 a) Jozy Altidore invested $6,000 at 5% annual interest, and left the money invested without withdrawing any of the interest for 12 years. At the end of 12 years, 80 Jozy withdrew the accumulated amount of money. What amount did Jozy withdraw, assuming the investment earns interest compounded annually? (3 marks). 819 82 83 84 b) Kyle will receive a sum of $800,000 that his late grandfather gifted him when he turns 21 eight years from today. Assuming a discount rate of 6%, compounded 85 semi-annually, determine what the gift is worth today (3 marks). 86 87 88 89 c) Clarence expects to buy a single family home in five years for $650,000. If she wants to make a 20% downpayment and saves $2,000 at the end of each month 90 earning a return of 4.5%, compounded monthly, how much will she have for a down payment for a home at the end of the fifth year? (3 marks). 91 92 93 94 d) Jackie has just retired from her job. She will receive $2,500 as monthly pension for 20 years. If the discount rate is 5% per year, calculate the total present 95 value of her pension (3 marks). 96 97 98 99) i) Chloe wants to buy a boat that costs $50,000. If she makes a downpayment of $10,000 on the boat, calculate how mch her monthly boat payments will be 100 if she takes a 7-year loan with an interest rate of 13.5%, compounded monthly (3 marks). 101 102 103
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