Question 9

One year ago, the Jenkins Family Fun Center deposited $6,780 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,559 to this account. They plan on making a final deposit of $7,923 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 8 percent rate of return?

10 points

Question 10

If you put up $47,309 today in exchange for a 11.9 percent, 14 year annuity, what will the annual cash flow be?

10 points

Question 11

You are expecting to receive $300 at the end of each year in years 3, 4, and 5, and then 500 each year at the end of each year in years 10 through 25, inclusive. If the appropriate discount rate is 5.5 percent, for how much would you be able to sell your claim to these cash flows today?

10 points

Question 12

You are paying an effective annual rate of 13.98 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account? (Enter rate in percents, not in decimals.)

10 points

Question 13

What is the future value of a lump sum of $1,625, in 24 years, assuming an interest rate of 7.3 percent APR compounded semiannually?

10 points

Question 14

Assume you deposit $7,606 at the end of each year into an account paying 10.11 percent interest. How much money will you have in the account in 16 years?

10 points

Question 15

Curlys Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $21,496 per year forever. Suppose Curlys told you the policy costs $592,669. At what interest rate would this be a fair deal? (Enter interest rate in percents, not decimals.)

10 points

Question 16

You just paid $339,217 for a policy that will pay you and your heirs $11,528 a year forever. What rate of return are you earning on this policy? (Enter rate in percents, not in decimals.)

10 points

Question 17

Annuity X promises to pay you $2,000 a year for 25 years in exchange for $19,000 today. Annuity Y has the same riskiness, and thus the same discount rate, as Annuity X, and promises to pay you $8,795 per year for 30 years. Find the fair market value of Annuity Y.

10 points

Question 18

You expect to receive 1000 bucks every year at the end of each year, starting in year 7 and ending in year 21. If you expect the rate of return is 10.2 percent, and you invest all your cash flows at the going rate as soon as you receive them, how much money will you have at the end of year 25?