PRESENT VALUE OF A PERPETUITY

What is the present value of a $300 perpetuity if the interest rate is 9%? Round your answer to the nearest cent.

$

If interest rates doubled to 18%, what would its present value be? Round your answer to the nearest cent.

$

What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $1,250?

a. $81.25

b. $94.06

c. $85.31

d. $89.58

e. $77.19

EFFECTIVE RATE OF INTEREST

Find the interest rates earned on each of the following. Round each answer to two decimal places.

You borrow $750 and promise to pay back $780 at the end of 1 year.

%

You lend $750 and the borrower promises to pay you $780 at the end of 1 year.

%

You borrow $60,000 and promise to pay back $116,924 at the end of 7 years.

%

You borrow $8,000 and promise to make payments of $2,219.30 at the end of each year for 5 years.

%

FUTURE VALUE: ANNUITY VERSUS ANNUITY DUE

What's the future value of a 3%, 5-year ordinary annuity that pays $200 each year? Round your answer to the nearest cent.

$

If this was an annuity due, what would its future value be? Round your answer to the nearest cent.

$

TIME TO REACH A FINANCIAL GOAL

You have $56,930.69 in a brokerage account, and you plan to deposit an additional $3,000 at the end of every future year until your account totals $260,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal? Round your answer to two decimal places at the end of the calculations.

years

f you would like to accumulate $7,500 over the next 5 years, how much must you deposit each six months, starting six months from now, given a 6% interest rate and semiannual compounding?

a. $ 879.23

b. $ 654.23

c. $1,330.47

d. $ 569.00

e. $ 732.67