Problem 2 (20 points) Consider each of the following time value of money problems separately. Use the tables attached. YOU MUST SHOW YOUR WORK TO RECEIVE ANY CREDIT! Clearly indicate your answers! Round to whole dollars! 1. Jane wants to set aside funds to take an around the world cruise in four years. Assuming that Jane has $20,000 to invest today in an account expected to earn 6% per annum, how much will she have to spend on her vacation? 2. Lucy and Fred want to begin saving for their toddler's college education. They estimate that they will need $200,000 in fifteen years. If they are able to earn 5% per annum, how much must be deposited at the end of each of the next fifteen years to fund the education? 3. On January 1, 2020 Lance Company issued five-year bonds with a face value of $1,000,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10% (Market rate is 10%) Calculate the issue price of the bonds 4 Korman Company wishes to accumulate $1,000,000 by May 1, 2029 by making 10 equal annual deposits beginning May 1, 2020 to a fund paying 9% interest compounded annually. What is the required amount of each deposit? Periods DWN 5% 1.05000 1.10250 1. 15763 1.21551 1.27628 1.62889 2.07893 2.65330 69 1.06000 1 12360 1.19102 1.26248 1 33823 1.79085 2 39656 3 20714 Future Value of $1 10% 1.09000 1. 10000 1.18810 1.21000 1 29503 1.33100 1.41158 1.46410 1.53862 1.61051 2 36736 2.59374 3 64248 4.17725 5.60441 6.72750 12% 1. 12000 1.25440 1.40493 1 57352 1.76234 3.10585 5.47357 9 64629 10 15 20 Periods 1 2 3 4 5 10 15 20 595 0.95238 0.90703 0.86384 0.82270 0.78353 0.61391 0.48102 0.37689 Present Value of $1 6% 9% 10% 0.94340 0.91743 0.90909 0.89000 0.84168 0.82645 0.83962 0.77218 0.75132 0.79209 0.70843 0.68301 0.74726 0.64993 0.62092 0.55839 0.42241 0.38554 0.41727 0.27454 0.23939 0.31180 0.17843 0.14864 12% 0.89286 0.79719 0.71178 0.63552 0.56743 0.32197 0.18270 0.10367 Periods 1 2 3 4 5 10 15 20 5% 1.00000 2 05000 3.15250 4.31013 5.52563 12.57789 21.57856 33.06595 Future Value of an Ordinary Annuity of 1 6% 9% 10% 1.00000 1.00000 1.00000 2.06000 2.09000 2. 10000 3.18360 3.27810 3.31000 4.37462 4.57313 4.64100 5.63709 5.98471 6.10510 13.18079 15.19293 15.93743 23 27597 29.36092 31.77248 36.78559 51.16012 57 27500 12% 1.00000 2.12000 3.37440 4.77933 6.35285 17.54874 37.27972 72.05244 Periodic Rents 1 3 4 5 10 15 20 5% 0.95238 1.85941 2.72325 3.54595 4.32948 7.72173 10.37966 12.46221 Present Value of an Ordinary Annuity of 1 6% 9% 10% 0.94340 0.91743 0.90909 1.83339 1.75911 1.73554 2.67301 2.53130 2.48685 3.46511 3.23972 3.16986 4.21236 3.88965 3.79079 7.36009 6.41766 6.14457 9.71225 8.06069 7.60608 11.46992 9.12855 8.51356 12% 0.89286 1.69005 2.40183 3.03735 3.60478 5.65022 681086 7.46944
