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Q2. Deborah is a first year Finance student at the university and she approached you with the following queries. (10 Marks). A) Deborah Smith wants
Q2. Deborah is a first year Finance student at the university and she approached you with the following queries. (10 Marks). A) Deborah Smith wants to accumulate $9000 by the end of 12 years. If the interest rate is 9 percent per annum, how much will she have to invest today to achieve her goal? (1 Mark for the correct formula, 1 Mark for the correct calculation and 1 Mark for the correct answer to equal a total of 3 Marks). B) Deborah needs to borrow money for an urgent matter. Her aunt Mary has offered to lend her some money. Deborah decides to borrow $1300 and agree to pay back $1500 in 2 years. Alternatively, she could borrow from your bank that is charging 6.5 per cent interest per annum. Should she go with her aunt or the bank? (1 Mark for the correct formula, 2 Marks for the correct calculation and 1 Mark for the correct answer to equal a total of 4 Marks). C) Deborah, the designated hitter for the Forest Heat, is expected to hit 12 home runs in 2015. If her home-run-hitting ability is expected to grow by 12 per cent every year for the next 5 years, how many home runs is she expected to hit in 2020? (1 Mark for the correct formula, 1 Mark for the correct calculation and 1 Mark for the correct answer to equal a total of 3 Marks)
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