es Exercise B-18 (Algo) Practical applications of the time value of money LO P1, P2, P3,...

Transcribed Image Text:

es Exercise B-18 (Algo) Practical applications of the time value of money LO P1, P2, P3, P4 Provided are links to the present and future value tables: (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to the nearest whole dollar.) a. How much would you have to deposit today if you wanted to have $52,000 in four years? Annual interest rate is 9%. b. Assume that you are saving up for a trip around the world when you graduate in three years. If you can earn 8% on your Investments, how much would you have to deposit today to have $14,000 when you graduate? (Round your answer to 2 decimal places.) c-1. Calculate the future value of an investment of $630 for nine years earning an interest of 10%. (Round your answer to 2 decimal places.) c-2. Would you rather have $630 now or $1,000 nine years from now? d. Assume that a college parking sticker today costs $76. If the cost of parking is increasing at the rate of 5% per year, how much will the college parking sticker cost in eight years? (Round your answer to 2 decimal places.) e. Assume that the average price of a new home is $120,500. If the cost of a new home is increasing at a rate of 8% per year, how much will a new home cost in ten years? (Round your answer to 2 decimal places.) f. An investment will pay you $9,000 in 9 years, and it also will pay you $280 at the end of each of the next 9 years (years 1 through 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.) g. A college student is reported in the newspaper as having won $9,500,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $9.5 million now. Instead she will receive $475,000 at the end of the year for each of the next 20 years. If the annual interest rate is 6%, what is the present value (today's amount) that she won? (ignore taxes) (Round your answer to nearest whole dollar.) a. Present value S b. Present value S 36,838 11,113.65) c-1, Future value $ 1,485.51 c-2 Would you rather have $630 now or $1,000 nine years from now? Now < Prev 2 of 13 Next > es Exercise B-18 (Algo) Practical applications of the time value of money LO P1, P2, P3, P4 Provided are links to the present and future value tables: (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to the nearest whole dollar.) a. How much would you have to deposit today if you wanted to have $52,000 in four years? Annual interest rate is 9%. b. Assume that you are saving up for a trip around the world when you graduate in three years. If you can earn 8% on your Investments, how much would you have to deposit today to have $14,000 when you graduate? (Round your answer to 2 decimal places.) c-1. Calculate the future value of an investment of $630 for nine years earning an interest of 10%. (Round your answer to 2 decimal places.) c-2. Would you rather have $630 now or $1,000 nine years from now? d. Assume that a college parking sticker today costs $76. If the cost of parking is increasing at the rate of 5% per year, how much will the college parking sticker cost in eight years? (Round your answer to 2 decimal places.) e. Assume that the average price of a new home is $120,500. If the cost of a new home is increasing at a rate of 8% per year, how much will a new home cost in ten years? (Round your answer to 2 decimal places.) f. An investment will pay you $9,000 in 9 years, and it also will pay you $280 at the end of each of the next 9 years (years 1 through 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.) g. A college student is reported in the newspaper as having won $9,500,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $9.5 million now. Instead she will receive $475,000 at the end of the year for each of the next 20 years. If the annual interest rate is 6%, what is the present value (today's amount) that she won? (ignore taxes) (Round your answer to nearest whole dollar.) a. Present value S b. Present value S 36,838 11,113.65) c-1, Future value $ 1,485.51 c-2 Would you rather have $630 now or $1,000 nine years from now? Now < Prev 2 of 13 Next >