A Asset Valuation = Price

B Wealth Accumulation

C Funding Lump sum funds lump sum

D Funding Lump sum funds ordinary level annuity

E Funding Lump sum funds delayed level annuity

F Funding Ordinary level annuity funds lump sum

G Funding Ordinary level annuity funds delayed level annuity

H Classify the problem as one of the above types.

Classify the problem as one of the above types.

1.Your child is planning attend summer camp for three months, starting 7 months from now. The cost for camp is $1,000 per month, each month, for the three months she will attend.

If your investments earn 5% APR (compounded monthly), how much must you invest today such that your investment will grow to just cover the cost of the camp?

2. Classify the problem as one of the above types.

Youve had a great year at your job and to reward you, your boss offers you one of two choices:

(1)A lump sum bonus today of $5,000

(2)An increase in your monthly salary of $700 for the next 12 months.

If your investments earn 3% APR, compounded monthly, which alternative is worth more (as of today)?

3.Classify the problem as one of the above types.

You would like to retire 30 years from now. You expect that your retirement will last of 40 years. You want to be able to withdraw $5,000 per month from your retirement account during your retirement.

How much must you invest, starting next month, for the next 30 years to exactly fund your retirement if your investments earn 5% APR, compounded monthly?

4.

Classify the problem as one of the above types.

You are the investment manager of an insurance company that has sold an annuity that promises to pay its owner $1,000 per month for 120 months, starting 2 years from now. If your company can earn 6% APR, compounded monthly on its investments, how much do you have to invest today to exactly pay for the annuity?

5. Classify the problem as one of the above types.

You inherit $200,000 from you grandmother when you are born. The money is put into a trust fund that you cannot access until you are 21 years old. If the trust fund assets earn 6% APR, compounded monthly, how much will you have in the fund when you are 21 years old?

6.

Classify the problem as one of the above types.

When you are born you inherit $2,000,000 from your grandfather. So that you will not spend it all at once, he puts the money in a trust fund that will pay you a monthly stipend for 240 months, starting when you turn 21 years old. If the trust fund earns 5% APR on the money, how much will you get each month