Finding the Number of Periods, N

25. Suppose you decide to make end-of-year deposits, but you can save only $1,200 per year. Assuming that you would earn 6%, how long would it take you to reach your $10,000 goal' What if you made the deposits at the beginning of each year?

Finding the Interest Rate, I

26. Suppose you can save only $1,200 per year but will need to have $10,000 in 5 years. What rate of return would you need to reach your goal?

27. Elizabeth has $35,000 in an investment account. Her goal is to have the account grow to $1,000,000 in 10 years by making annual contributions of $50,000 to the account. What rate would she need to earn on the account in order to meet her goal?

28. Find the value of a British consol that pays $25 per year in perpetuity. The interest rate on investments of comparable risk is 5.2%.

29. What is the present value of an investment that will pay $100 per year forever if the required rate is 10%?

30. You have the opportunity to buy a perpetuity that pays $1,000 annually. Your required rate of return on this investment is 15 percent. What is the maximum that you should be willing to pay for this investment?

31. You are willing to pay $15,625 to purchase a perpetuity that will pay you and your heirs $1,250 each year, forever. If your required rate of return does not change, how much would you be willing to pay if this were a 20-year annual payment, ordinary annuity instead of perpetuity?

32. Find the present value of a $100, 5-year ordinary annuity plus a final payment of $1,000 at a discount rate of 12%.