Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please show how to use math formulas to solve the questions. But you are not required to calculate the numerical results manually based on the
please show how to use math formulas to solve the questions. But you are not required to calculate the numerical results manually based on the formulas. 1a. If the appropriate discount rate for the following cash flows is 9.75% per year, what is the present value of the cash flows? | ||||||||
Rate | make the rate an absolute reference so that the formula may be entered once and then copied down. | |||||||
Year | Cash Flow | Present Value | ||||||
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
PV Today | ||||||||
1b. You are to make monthly deposits of $150 into a retirement account that pays 11 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 20 years? | ||||||||
PMT = | ||||||||
RATE = | (monthly rate here! Why?) | |||||||
NPER = | (number of months here! Why?) | |||||||
FV= | ||||||||
1c. Beginning three months from now, you want to be able to withdraw $1,200 each quarter from your bank account to cover college expenses over the next four years. If the account pays 0.50 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years? | ||||||||
PMT = | ||||||||
RATE = | (Should we enter quarterly rate here?) | |||||||
NPER = | (How may quarters?) | |||||||
PV= | ||||||||
1d. You want to be a millionaire when you retire in 40 years. How much do you have to save each month if you can earn a 10 percent annual return? | ||||||||
FV = | ||||||||
NPER = | ||||||||
RATE = | ||||||||
PMT= | In your formula, leave a space for PV! | |||||||
1e. While Steve was a college student, he borrowed $12,000 in student loans at an annual interest rate of 9 percent. If Steve repays $1,500 per year, how long will it take him to repay the loan? | ||||||||
PV= | ||||||||
PMT= | ||||||||
RATE = | ||||||||
NPER= |
Year | Cash Flow |
1 | $2,800 |
2 | 0 |
3 | 8,100 |
4 | 1,940 |
1c. Beginning three months from now, you want to be able to withdraw $1,200 each quarter from your bank account to cover college expenses over the next four years. If the account pays 0.50 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years? PMT = RATE = NPER = (Should we enter quarterly rate here?) (How may quarters?) PV= 1d. You want to be a millionaire when you retire in 40 years. How much do you have to save each month if you can earn a 10 percent annual return? FV= NPER = RATE = PMT= In your formula, leave a space for 1c. Beginning three months from now, you want to be able to withdraw $1,200 each quarter from your bank account to cover college expenses over the next four years. If the account pays 0.50 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years? PMT = RATE = NPER = (Should we enter quarterly rate here?) (How may quarters?) PV= 1d. You want to be a millionaire when you retire in 40 years. How much do you have to save each month if you can earn a 10 percent annual return? FV= NPER = RATE = PMT= In your formula, leave a space for
Step 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