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Chad will graduate next year. When he begins working, he plans to deposit $8,000 at the end of each year into a retirement account that

  1. Chad will graduate next year. When he begins working, he plans to deposit $8,000 at the end of each year into a retirement account that pays 7% interest. How much will be in his account after 25 deposits?
  2. How much must be invested now at 4% interest to produce $7,407 at the end of every year for 10 years?
  3. A car may be purchased with a $2,900 down payment now and 72 monthly payments of $370. If the interest rate is 8% compounded monthly, what is the price of the car?
  4. Sean DaPaul wants to buy a $180,000 house. He has $20,000 in cash to use as a down payment. The bank offers to lend Sean the remainder at a 6% annual interest rate. The term of the loan is 30 years. What is the monthly loan payment?
  5. Company ABC buys a machine that will cost $300,000 to purchase. Annual operating and maintenance costs (O&M costs) will be $49,000 per year for 10 years and the machine will bring estimated revenues of $100,000 per year for 10 years. The machine is expected to have a useful life of 10 years and will be thrown away at the end of the 10th year. The firm uses a 10% interest rate. What is the machine's net present value or net present worth?
  6. A construction company started a service with no initial cost and has estimated the following cash flows for 4 years: $125, $150, $175 and $200, respectively. The construction firm uses a 7% interest rate. What is the present value of expected streams of cash flow?
  7. Tazin dreams of starting his own business to import consumer electronic products to his home country. He estimates he can earn 5% on his investments and that he will need to have $260,000 at the end of year 10 if he wants to give his business a good solid foundation. He now has $28,850 in his account, and he believes he can save $13,500 each year from his income, beginning now. He plans to marry at about the end of year 6 and will skip the investment contribution that year. How far below or above his $260,000 goal will he be?
  8. Michael Ross is saving up for a new car. She wants to finance no more than $12,000 of the $23,000 estimated price in two years. He deposits $3,500 into a savings account now and will make monthly deposits for the next two years.If the savings account pays a nominal interest rate of 4.5% per year with monthly compounding, how much must she deposit each month?
  9. Assume that you save $1 a day for 50 years, that you deposit it in the bank at the end of each month, and that there are 30.5 days per month (you save $30.50 each month). How much do you have after 50 years, if the account offers a 0.8% per month?
  10. Drake, a young entrepreneur has decided to start a new business. His wealthy parents are going to cover the initial cost of investing in the necessary equipment. He estimates that during the first year he won't be able to generate revenue. However,after the first year he expects to generate the following cash flows: $1,100, $1,200, $1,300 and $1,400, respectively. Drake is using an interest rate of 4%. What is the present value of the future cash flows previously mentioned?

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