Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Provided are links to the present and future value tables: (PV of $1,FV of $1, PVA of $1, and FVA of $1 ) Note: Use
Provided are links to the present and future value tables: (PV of $1,FV of $1, PVA of $1, and FVA of $1 ) Note: Use appropriate factor(s) from the tables provided. Round your answer to the nearest whole dollar. a. How much would you have to deposit today if you wanted to have $49,000 in five years? Annual interest rate is 8%. b. Assume that you are saving up for a trip around the world when you graduate in three years. If you can earn 7% on your investments, how much would you have to deposit today to have $13,000 when you graduate? Note: Round your answer to 2 decimal places. c-1. Calculate the future value of an investment of $594 for eight years earning an interest of 12%. Note: Round your answer to 2 decimal places. c-2. Would you rather have $594 now or $1,000 eight years from now? d. Assume that a college parking sticker today costs $72. If the cost of parking is increasing at the rate of 4% per year, how much will the college parking sticker cost in nine years? Note: Round your answer to 2 decimal places. e. Assume that the average price of a new home is $117,500. If the cost of a new home is increasing at a rate of 9% per year, how much will a new home cost in nine years? Note: Round your answer to 2 decimal places. f. An investment will pay you $8,000 in 9 years, and it also will pay you $260 at the end of each of the next 9 years (years 1 through 9). If the annual interest rate is 5%, how much would you be willing to pay today for this type of investment? Note: Round your intermediate calculations and final answer to the nearest whole dollar. g. A college student is reported in the newspaper as having won $8,500,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $8.5 million now. Instead she will receive $425,000 at the end of the year for each of the next 20 years. If the annual interest rate is 5%, what is the present value (today's amount) that she won? (ignore taxes). Note: Round your answer to nearest whole dollar
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