Question 1 a) Mr James plans to make a series of deposits in an interest bearing account. The interest rate is 9% per annum. He plans to deposit $1,000 end of first year, $2,000 in two years, and $8,000 in five years and also intends to withdraw $3,000 in three years and $5,000 in seven years. Required: i) Calculate how much Mr Wong will have after eight years. (6 marks) ii) Calculate the present value of these cash flows using the answer in (1) above. (4 marks) b) A financial analyst has determined that your company can afford a $15,000 annual payment for the next ten years. A new computer system costs $100,000 total. If your company can borrow the money at 8% per annum, determine if it can afford the new system. (5 marks) You have $10,000 that you can deposit in any of four savings accounts for a 3-year period. Bank A compounds interest on an annual basis, bank B compounds interest twice a year, Bank C compounds interest each quarter and bank D compounds interest on a monthly basis. All four banks have a stated annual interest rate of 4%. Calculate the amount that you would have at the end of the third year, leaving all interest paid on deposit, in each bank. On the basis of your findings above, which bank should you deal with? Give your reason. (6 marks) d) A company is comparing two investments. Both require an initial investment of $2,500. Investment A returns $4,700 in eight years while investment B returns $5,650 in 12 years. Calculate the rate of return for both investments and state which of these investments has the higher return. (4 marks) English (United States) e) You have recently graduated with a Bachelor's degree in Finance but however found a job in sales and marketing instead. Your new job requires you to travel frequently and so you intend to take out a bank loan to purchase a car which will cost you $63,808. The bank quotes an annual interest rate of 12% for a 50-month loan with a 20% down payment. Calculate your monthly payments. (5 marks) f) Winny has a contract to sell a necklace for $70,000 and payment is to be received at the end of two years. The necklace costs $60,000 today and could be sold for this amount. The interest rate is 10% per annum and Winny does not want to give up the necklace for two years. Explain, with computations, whether the contract is a good financial arrangement for Winny. (4 marks) English (United States)