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can tiu answer 5-8 5) Dick and Jane Smith invested $10,000 in a savings account paying 5% annual interest when their son, Jason, was born.

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5) Dick and Jane Smith invested $10,000 in a savings account paying 5% annual interest when their son, Jason, was born. They also deposited $500 on each of his birthdays until he was 20 (including his 20th birthday). To the closest dollar, how much was in the savings account on his 20th birthday (after the last deposit)? a) $43,066. b) $53,066. c) $30,000. d) $26,533 6) Which of the following is true about bonds? a) Bonds are a safe investment because you cannot lose principal. b) When market interest rates increase, the periodic interest payment increases. c) The best time to buy bonds would be when you think interest rates are about to increase. d) The current value depends on the face amount, the number of future payments, the market interest rate, but not the stated interest rate. e) All of the above statements are false. Suppose you have a winning ticket for a $1,000,000 CA lottery. It pays 5 payments of $200,000 per year starting in one year from today, or you may take a lump sum equal to the present value of the 5 payments today based on a 5% discount rate. If you elect to receive the cash now, you will receive: a) $552,563. b) $783,530. c) $865,896 7) d) $950,000 e) $1,000,000. 8) Consider the question above. If interest rates had been higher, and you elect to receive the cash now you would receive: a) less b) more c) the same. d) Can't be determined from the information given

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