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IUURWUM B D E H K Question 1 - Time value of money (20 marks) =) Four years ago Tyler Stone wanted to build a
IUURWUM B D E H K Question 1 - Time value of money (20 marks) =) Four years ago Tyler Stone wanted to build a duplex in area C. A home builder estimated the cost to be $350,000. Due to unforeseen circumstances he had to shelve the idea then but wants to build the duplex now. The home builder informed Tyler that the cost rose 7% compounded annually for the first two years and 8% compounded annually for the following two years. If Tyler wants to build the duplex today, how much will it cost him? (5 marks) b) Jane Doe estimated the cost of replacing the manufacturing equipment in four years to be $150,000. If average returns on investment is 6.5% determine the amount of money that the company needs to invest today in order to be able to buy the equipment at the end of the fourth year. (2 marks) Jack's money ill's money 3 -9 ) Jack and Jill have agreed to each make $350 monthly contribution to their RRSPs for thirty five years in order to have financial security in their 50 old age. By how much will Jack's money differ from Jill's If Jack makes month-end contribution to his RRSP while Jack makes contribution to 51 his own at the beginning of each month? Assume each RRSP earns 8% annually (5 marks). 52 53 Difference 55 56 d) Bliss Inc. plans to give $100,000 in total to 20 students at the end of every month for the next two years to help them pay for tuition and textbooks If the discount rate (interest rate) is 5 percent per year, determine how much money the company needs to set aside today in order to be able to 58 provide scholarship to the students (2 marks). 50 52 50 61 Damitha mathemat - CASO 10 Intan Sheet1 N20
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