Question 5 You own a classic automobile that is currently valued at $147,900 If the value increases by 6 5 percent annually, how much will the automobile be worth ten years from now This morning, TL Trucking invested $80,000 to help fund a company expansion project planned for 4 years from now How much additional money will the firm have 4 years from now if it can earn 5 percent rather than 4 percent on its savings This morning, you borrowed $150,000 to buy a house The mortgage rate is 7 35 percent The loan is to be repaid in equal monthly payments over 20 years The first payment is due one month from today How much of the second payment applies to the principal balance (Assume that each month is equal to 1 12 of a year ) Question 6 You want to retire at age 60 and expert to live another 27years On the day you retire you will have GH 464900 in your retirement savings account You are conservative and expect to earn 4 5 on your money during your retirement How much can you withdraw from your retirement savings account each month if you plan to die on the day you spend your last penny Nana and Abena Sarfo are saving for the university education of their newborn daughter, Akosua The Sarfos estimate the university expenses will run GH 30000 per year when their daughter reaches university in 18years The annual interest rate over the next few decades will be 14 How much should they deposit in the bank each year so that their daughter will be completely supported four years of university Assume she enters the university on her 18 th birthday You want to buy a house that cost GH169000 You will put down GH20000 deposits and borrow the difference to buy the house The mortgage rate is 7 5 and the loan period is 30 years Payments are made monthly If you pay for the house according to the loan agreement, what will each payment be You need GH 5000 for a project If you have GH 2300 in an investment account paying 15 , how long must you wait to realize this goal If on the other hand you can wait for 10 years to realize the amount, what is the minimum interest rate that will get you there You plan to buy a house valued at GH 45000 five years from now Interest rate on the market is expected to remain at 10 If you deposit GH6500 every year for 5years, in advance, will you meet your target If not, how large must your deposits be at the same interest rate to meet your target Question 7 You would like to give your daughter $75,000 towards her college education 17 years from now How much money must you set aside today for this purpose if you can earn 8 percent on your investments You just won a national sweepstakes For your prize, you opted to receive never ending payments The first payment will be $12,500 and will be paid one year from today Every year thereafter, the payments will increase by 3 5 percent annually What is the present value of your prize at a discount rate of 8 percent The current value of future cash flows discounted at the appropriate discount rate is term as present value Intuitively explain the concept of the present value Your friend is celebrating her 25th birthday today and wants to start saving for her anticipated early retirement at age 55 She wants to be able to withdraw $10,000 from her savings account on each birthday for 10 years following her retirement, the first withdrawal will be in her 56th birthday She wants to make equal, annual payments on each birthday in a new savings account she will establish for her retirement fund The account pays 8 per cent interest per year If she starts making these deposits on her 26th birthday and continues to make deposits until she is 55 (the last deposit will be on her 55th birthday), what amount must she deposit annually to be able to make the desired withdrawal on retirement Suppose your friend has just inherited a large sum of money Rather than making equal payments, she has decided to make one lump sum payment on her 26th birthday to cover her retirement needs What amount would she have to deposit Question 8 You want to have $1 million to use for retirement in 35 years If you can earn 1 per month, how much do you need to deposit on a monthly basis if the first payment is made in one month What if the first payment is made today Prepare an amortization schedule for a five year loan of $36,000 The interest rate is 9 percent per year, and the loan calls for equal annual payments How much interest is paid in the third year How much total interest is paid over the life of the loan Suppose you deposit $50 a month into an account that has an APR of 9 , based on monthly compounding How much will you have in the account in 35 years You need $15,000 in 3 years for a new car If you can deposit money into an account that pays an APR of 5 5 based on daily compounding, how much would you need to deposit

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Question 5 You own a classic automobile that is currently valued at $147,900. If the value increases by 6.5 percent annually, how much will the

Question 5

You own a classic automobile that is currently valued at $147,900. If the value increases by 6.5 percent annually, how much will the automobile be worth ten years from now?
This morning, TL Trucking invested $80,000 to help fund a company expansion project planned for 4 years from now. How much additional money will the firm have 4 years from now if it can earn 5 percent rather than 4 percent on its savings?
This morning, you borrowed $150,000 to buy a house. The mortgage rate is 7.35 percent. The loan is to be repaid in equal monthly payments over 20 years. The first payment is due one month from today. How much of the second payment applies to the principal balance? (Assume that each month is equal to 1/12 of a year.)

Question 6

You want to retire at age 60 and expert to live another 27years. On the day you retire you will have GH 464900 in your retirement savings account. You are conservative and expect to earn 4.5% on your money during your retirement. How much can you withdraw from your retirement savings account each month if you plan to die on the day you spend your last penny?

Nana and Abena Sarfo are saving for the university education of their newborn daughter, Akosua. The Sarfos estimate the university expenses will run GH 30000 per year when their daughter reaches university in 18years. The annual interest rate over the next few decades will be 14%. How much should they deposit in the bank each year so that their daughter will be completely supported four years of university? Assume she enters the university on her 18^th birthday.

You want to buy a house that cost GH169000. You will put down GH20000 deposits and borrow the difference to buy the house. The mortgage rate is 7.5% and the loan period is 30 years. Payments are made monthly. If you pay for the house according to the loan agreement, what will each payment be?

You need GH 5000 for a project. If you have GH 2300 in an investment account paying 15%, how long must you wait to realize this goal? If on the other hand you can wait for 10 years to realize the amount, what is the minimum interest rate that will get you there?

You plan to buy a house valued at GH 45000 five years from now. Interest rate on the market is expected to remain at 10%. If you deposit GH6500 every year for 5years, in advance, will you meet your target? If not, how large must your deposits be at the same interest rate to meet your target?

Question 7

You would like to give your daughter $75,000 towards her college education 17 years from now. How much money must you set aside today for this purpose if you can earn 8 percent on your investments?

You just won a national sweepstakes! For your prize, you opted to receive never-ending payments. The first payment will be $12,500 and will be paid one year from today. Every year thereafter, the payments will increase by 3.5 percent annually. What is the present value of your prize at a discount rate of 8 percent?

The current value of future cash flows discounted at the appropriate discount rate is term as present value. Intuitively explain the concept of the present value.

Your friend is celebrating her 25th birthday today and wants to start saving for her anticipated early retirement at age 55. She wants to be able to withdraw $10,000 from her savings account on each birthday for 10 years following her retirement, the first withdrawal will be in her 56th birthday. She wants to make equal, annual payments on each birthday in a new savings account she will establish for her retirement fund. The account pays 8 per cent interest per year.

If she starts making these deposits on her 26th birthday and continues to make deposits until she is 55 (the last deposit will be on her 55th birthday), what amount must she deposit annually to be able to make the desired withdrawal on retirement?
Suppose your friend has just inherited a large sum of money. Rather than making equal payments, she has decided to make one lump-sum payment on her 26th birthday to cover her retirement needs. What amount would she have to deposit?

Question 8

You want to have $1 million to use for retirement in 35 years. If you can earn 1% per month, how much do you need to deposit on a monthly basis if the first payment is made in one month? What if the first payment is made today?

Prepare an amortization schedule for a five-year loan of $36,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year? How much total interest is paid over the life of the loan?

Suppose you deposit $50 a month into an account that has an APR of 9%, based on monthly compounding. How much will you have in the account in 35 years?

You need $15,000 in 3 years for a new car. If you can deposit money into an account that pays an APR of 5.5% based on daily compounding, how much would you need to deposit?