Q1. You are considering an investment which will pay $5000 a year for 25 years, starting 1 year from today. How much should you pay for this investment if you wish to earn a 7.5 percent rate of return?

A. $55,734.73

Somehow, I could not get the answer correct. I have been using a financial calculator to get the answer.

this is how I input the data

PV =?

FV = $5000*25 years = $125,000,

N=25,

I/Y = 7.5%,

PMT=0

Can you please guide me how I can get the right answer?

Q2. You have just received a prize worth $150. You deposited your winnings into an account which pays 6% interest compounded monthly. How long will you have to wait until your winning are worth $250?

A. 102.42 months

Using a financial calculator, I got 105.20 months.

PV=-$150

I/Y=6%,

PMT=0

FV= $250

N = ?

N = 8.767 years *12 months = 105.20 months

Can you please help me on this?

Q3. You have just won a $100,000 jackpot. you can receive $10,000 a year for 10 years or $83,000 as a lump sum payment today. What is the interest rate on the annuity?

A. 3.54 %

PV= -$10,000

N= 10

PMT= $10,000

FV = $100,000

I/Y = ?

My answer is way too far from the actual answer. Please show me how to solve this problem.

Q4. You invest $10,000 today into a retirement account. you expect to earn 11%, compounded monthly, on your money for the next 25 years. After that, you want to be more conservative, so only expect to earn 7%, compounded semi-annually. How much money will have in your account when you retire 40 years from now, assuming that this is only deposit you make into the account?

A. $433,590

My answer is also far from the actual.

Please help me on this.

Thanks