Problems

Problem 1.

Your coin collection contains fifty 1952 silver dollars.If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retired in 2060 assuming they appreciate at 4.1% annual rate?

Problem 2

Assume the total cost of a college education will be $300,000 when your child enters college in 18 years. You presently have $65,000 to invest.What annual rate of interest must you earn on your investment to cover the cost of your child's college education?

Problem 3.

Find the future value and interest earn if $8,906 is invested for 9 years at 5% compounded

a)Annually

b)Semiannually

c)continuously

Problem 4

Find the present value of $25,000 if interest is 6% compounded quarterly for 4 years

Problem 5

Five years ago, Maria's annual salary was $73,500. Today, she earns $91,900. What has been the average annual percentage rate of growth of Maria's salary?

Problem 6

You currently have $3,500 invested at an annual rate of 8%. How long will it take for this investment to grow to a value of $5,000? Round your answer to two decimals.

Problem 7

You have just received a bonus of $8,000 and are looking to deposit the money in a bank account for five years. You investigate the annual deposit rate of several banks and collected the following information:

Bank

Compounding frequency

Annual Rate

A

Annually

5.0%

B

Quarterly

5.0%

C

Monthly

4.80%

D

Daily

4.85%

You understand that the more frequently interest is earned in each year, the more you will have at the end of your 5 years investment horizon.To determine which bank, you should deposit your money in calculate how much money you will have at the end of the five years at each bank.

Bank

Value after 5 years

A

B

C

D

E

Decision:

7.Find the present value of the following cash flow:r = 8%

0

1

2

3

4

$13,000

$11,500

$12,700

$9,635

PV = _________________