Please complete the following questions,. There is no need to show calculation but the numbers have to to be in the right place where each letter is. For more clarification please hesitate to ask.

Due in class on Oct 22nd Your Name _______________________ 2015 Fall BUS301 Assignment 2 - TVM calculations in daily life Question 1: Student Loan Repayment When she is to graduate from college in 8 months, Alice will have a $50,000 balance on her Subsidized Federal Stafford Loan. Interest rate on the loan is 0.5% a month, roughly 6% a year. She is now planning her repayment of this loan. There are many repayment options and Alice is considering the following two: 1) Standard Repayment Plan Pay fixed monthly payments over 25 years, i.e. 300 monthly payments 2) Graduated Repayment Plan Payments are lower at first and then increase every two years over 25 years, i.e. also 300 monthly payments 1. Create a timeline for the \"Standard Repayment Plan\" option. The timeline must be complete. | | | ... | | | 2. Calculate the fixed monthly payment needed in the Standard Repayment Plan\" option. N: I: PV: PMT: FV: _______ _______ _______ _______ _______ Solving for _______=________ 3. Based on your understanding of the mechanism of an amortized loan, which option's first monthly payment will be larger? Why? 4. Based on your understanding of the mechanism an amortized loan, which option will cost Alice more interest? Due in class on Oct 22nd Your Name _______________________ Question 2: Claiming the Jackpot Alice just won the $75 million jackpot with \"Mega Millions\". LotteryUSA asked Alice to choose how to claim her prize. There are two options available: A. Cash option Alice gets a lump sum of $46 million now B. Annuity option Alice gets $3,000,000 every year for 25 years For this question, assume 40% income tax all the time. 1. Suppose that Alice can earn 3% annual rate of return on any investment that she makes. If Alice chooses to receive the cash lump sum of $46 million, she could invest the entire amount and then make annual withdrawals from her investment account. How large will be her withdrawals, assuming Alice will make 25 annual withdrawals of equal size so as to empty her account? (Complete the timeline and fill in the financial calculator inputs) | N: I: PV: PMT: FV: _______ _______ _______ _______ _______ | | ... | | | Solving for _______=________ 2. Which option should Alice choose if she can earn 3% annual rate of return on any investment that she makes? 3. Which option should Alice choose if she can earn 5% annual rate of return on any investment that she makes? Due in class on Oct 22nd Your Name _______________________ Question 3: Buying an iMac Alice is buying a 27-inch iMac with Retina 5K display and she is deciding between two payment options: i. ii. Pay the full price $2,299.00 now Pay monthly payments of $110.37 for 24 months Alice can afford to choose either option but she wish to choose one that is financially wise. Alice is currently investing all her savings in a mutual fund. 1. What would be the monthly interest rate that Alice will pay if she chooses option ii? (Complete the timeline and fill in the financial calculator inputs) | N: I: PV: PMT: FV: _______ _______ _______ _______ _______ | | ... | | | Solving for _______=________ 2. Which option should Alice choose if her savings in the mutual fund grow at a monthly rate of 0.5%? 3. Which option should Alice choose if her savings in the mutual fund grow at a monthly rate of 1.5%