Answered step by step
Verified Expert Solution
Link Copied!

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 $57,000 in four years? Annual interest rate is 9%.

b. Assume that you are saving up for a trip around the world when you graduate in two years. If you can earn 8% on your investments, how much would you have to deposit today to have $15,500 when you graduate? Note: Round your answer to 2 decimal places.

c-1. Calculate the future value of an investment of $679 for nine years earning an interest of 10%. Note: Round your answer to 2 decimal places.

c-2. Would you rather have $679 now or $1,800 nine years from now?

d. Assume that a college parking sticker today costs $82. If the cost of parking is increasing at the rate of 5% per year, how much will the college parking sticker cost in eight years? Note: Round your answer to 2 decimal places.

e. Assume that the average price of a new home is $125,000. If the cost of a new home is increasing at a rate of 8% per year, how much will a new home cost in ten years? Note: Round your answer to 2 decimal places.

f. An investment will pay you $10,500 in 10 years, and it also will pay you $310 at the end of each of the next 10 years (years 1 through 10). If the annual interest rate is 6%, 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 $11,000,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $11 million now. Instead she will receive $550,000 at the end of the year for each of the next 20 years. If the annual interest rate is 6%, what is the present value (todays amount) that she won? (ignore taxes). Note: Round your answer to nearest whole dollar.

Please show your formula and calculations.

a. Present Value

b. Present Value

c-1. Future Value

c-2. Would you rather have $679 now or $1,800 nine years from now?

d. Future Value

e. Future Value

f. Present Value

g. Present Value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Health And Safety Environment And Quality Audits A Risk Based Approach

Authors: Stephen Asbury

4th Edition

1032427574, 978-1032427577

More Books

Students also viewed these Accounting questions