Answered step by step
Verified Expert Solution
Question
1 Approved Answer
a. How much would you have to deposit today if you wanted to have $40,000 in five years? Annual interest rate is 8%. (PV of
a. How much would you have to deposit today if you wanted to have $40,000 in five years? Annual interest rate is 8%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to the nearest whole dollar.) Present value b. Assume that you are saving up for a trip around the world when you graduate in three years. If you can earn 7% on your investments, how much would you have to deposit today to have $10,000 when you graduate? (Round your answer to 2 decimal places.) Present value C-1. Calculate the future value of an investment of $486 for eleven years earning an interest of 8%. (Round your answer to 2 decimal places.) Future value c-2. Would you rather have $486 now or $1,000 eleven years from now? Now Eleven years from now d. Assume that a college parking sticker today costs $60. If the cost of parking is increasing at the rate of 4% per year, how much will the college parking sticker cost in nine years? (Round your answer to 2 decimal places.) Future value e. Assume that the average price of a new home is $100,000. If new homes are increasing at a rate of 9% per year, how much will a new home cost in nine years? (Round your answer to 2 decimal places.) Future value f. An investment will pay you $5,000 in 9 years, and it will also pay you $200 at the end of each of the next 9 years (years 1 thru 9). If the annual interest rate is 5%, how much would you be willing to pay today for this type of investment? (Round your intermediate calculations and final answer to the nearest whole dollar.) Present value g. A college student is reported in the newspaper as having won $5,000,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $5.0 million now. Instead she will receive $250,000 at the end of the year for each of the next 20 years. If the annual interest rate is 5%, what is the present value (today's amount') that she won? (ignore taxes). (Round your answer to nearest whole dollar.) Present value
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started