MC algo 5.1 Simple Interest 75 ins Thomas invests $112 in an account that pays 6 percent simple interest How much money will Thomas have at the end of 4 years? MC algo 5-6 Calculating Future Values Today, your dream car costs $64,400. You feel that the price of the car will increase at an annual rate 23 percent. If you plan to wait 3 years to buy the car, how much will it cost at that time? MC algo 5-9 Calculating Future Values 279 Retirement investment Advisors, Inc., has just offered you an annual interest rate of 45 percent until you retire in 45 years. You believe that interest rates will increase over the next year and you would be offered 51 percent per year one year from today. It you plan to deposit 13.500 into the account either this year or next year how much more will you have when you recite it you wait one year to make your deposit? MC algo 5-12 Calculating Future Values 275 You Save Bank has a unique account. If you deposit 58750 today, the bank will pay you an annual interest rate of 6 percent for 3 years, 6.6 percent for 2 years, and 73 percent for 6 years. How much will you have in your account in 11 years? MC algo 5-13 Calculating Future Values ts The most recent census for a city indicated that there were 930,105 residents. The population of the city is expected to increase at an annual rate of 3.8 percent each year for the next 15 years. What will the population be at that time? MC algo 5-16 Calculating Present Values A company has a pension ability of $470,000,000 that it must pay in 28 in years. If it can earn an annual interest rate of 43 percent, how much must it deposit today to fund this liability MC algo 5-18 Calculating Present Values A small business has determined that the machinery they currently use will wear out in 16 years. To replace the new machine when it wears out the company wants to establish a savings account today if the interest rate on the account is 2 percent per quarter and the cost of the machinery will be $345,000, how much will the company have to deposit today? MC algo 5-21 Calculating Present Values Both you and your older brother would like to have $25,500 in 10 in years. Because of your success in this class, you feel that you are a more savvy investor than your brother and will be able to earn an annual return of 115 percent compared to your brother's 10.4 percent. How much less than your brother will you have to deposit today? MC algo 5-23 Calculating Present Values You need to have $32,750 in 11 years. You can earn an annual interest rate of 6 percent for the first 3 years, 6.6 percent for the next 2 years, and 73 percent for the final 6 years. How much do you have to deposit today? MC algo 5-38 Lump Sums 275 Your sister just deposited $6.500 into an investment account She believes that she will earn an annual return of 9 percent for the next 8 years. You believe that you will only be able to earn an annual return of 84 percent over the same period. How much mare must you deposit today in order to have the same amount as your sister in 8 years? MC algo 6-2 Present Value Of Unequal Cash Flows 3 Myca Corp has a project with the following cash flows. What is the value of the cash flows today assuming an annual interest tate of 97 percent? Year 1 Cash Flow $1,750 2,210 2,535 2,545 4 MC algo 6-5 Future Value Of Unequal Cash Flows 75 One year ago, the Jenkins Family Fun Center deposited $5,000 into an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,000 to this account. They plan on making a final deposit of $9,000 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a Fate of return of 8 percent? 13 MC algo 6-9 Calculating Annuity Present Values 2.75 pour Your parents are giving you $165 a month for 4 years while you are in college At an interest rate of 34 percent per month what are these payments worth to you when you first start college? MC algo 6-11 Calculating Annuity Present Values Todd can afford to pay $365 per month for the next 5 years in order to purchase a new car The interest rate is 6.3 percent compounded monthly What is the most he can afford to pay for a new car today? 15 MC algo 6-13 Calculating Annuity Present Values Your crazy uncle left you a trust that will pay you $39,000 per year for the next 30 years with the first payment received one year from today. If the appropriate interest rate is 72 percent, what is the value of the payments today? 16 MC algo 6-17 Calculating Annuity Future Values 275 Dom You have just started a new job and plan to save $4350 per year for 38 years until you retire. You will make your first deposit in one year. How much will you have when you retire if you earn an annual interest rate of 10.73 percent? MC algo 6-19 Calculating Annuity Future Values Bob has saved $330 each month for the last 6 years to make a down payment on a house. The account earned an interest rate of 54 percent per month. How much money is in Bob's account? 18 MC algo 6-21 Calculating Annuity Future Values You plan to save $5.200 per year for the next 10 years. After the last deposit, you will keep the money in the account for more years. The account will earn an interest rate of 5 5 percent How much will there be in the account 15 years from today? 19 MC algo 6-27 Calculating Annuity Payments 275 Ken just purchased new furniture for his house at a cost of $16,900. The loan calls for weekly payments for the next 8 years at an annual interest rate of 1129 percent. How much are his weekly payments? MC algo 6-64 Perpetuities And Annuities Mo will receive a perpetuity of $31.000 per year forever, while Curly will receive the same annual payment for the next 35 years. If the interest rate is 75 percent, how much more are Mo's payments worth