Answered step by step
Verified Expert Solution
Question
1 Approved Answer
only need help on problems 6, 8, 10, 12 thank you 5. Find the future value of the following annuity: $375 per month, for fifteen
only need help on problems 6, 8, 10, 12 thank you
5. Find the future value of the following annuity: $375 per month, for fifteen years, at 8 percent simple rate. Make sure to show your work 6. You borrow $50,000 today. If the interest rate is 6 percent compounded monthly and you make monthly payments of $250, how long will it take you to pay off your loan? Make sure to show your work. 7. Your retirement account has a current balance of $50,000. What interest rate would you need to be earned in order to accumulate a total of $1,000,000 in 30 years, by adding $8,000 annually? Make sure to show your work. 8. What is the value of receiving $300 each year in perpetuity if the interest rate is 12 percent? Make sure to show your work. 9. Suppose that you will receive $250 tomorrow. You will then receive fourteen additional cash flows of $250 each year. If the interest rate is 10 percent, what is the value of these cash flows? Make sure to show your work. 10. Consider an investment costing $20,000. This investment will generate leveled cash flows for 8 years. If the interest rate is 8 percent, what is the amount of each cash flow? Make sure to show your work. 11. Your goal is to save $75,000 at the end of 8 years. Today, you deposit $10,000. You make an additional 5 yearly deposits of $10,000. What must the interest rate be? Make sure to show your work. 12. You deposit $10,000 in a savings account paying 10 percent interest. If the inflation rate is expected to be 2.75 percent over the course of next year, at what rate will the purchasing power of your investment grow? Make sure to show your work. 13. You will receive $500 tomorrow. You will receive an additional nine cash flows growing at the rate of inflation of 2 percent per year. The nominal interest rate is 10 percent. a. Find the value of the stream of cash flows. Make sure to show your work. b. What is the real value of each cash flow received? Make sure to show your work. c. Find the value of the stream of cash flows, based on real values. Make sure to show your work d. What do you observe? ExplainStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started