SHOW YOUR CALCULATIONS.

You have $25,000 that you want to invest today. You are offered an investment plan that will pay you 5.3 per cent annual return for the next 15 years and 6.9 percent annual return for the following 25 years. How much will you have at the end of 40^th year?

You find out that if you deposit your current savings of $20,000 today in a bank account and keep on depositing $15,000 every year (at the end of each year), you will have one million dollars when you retire 35 years from today. What is the annual interest rate paid by the bank account? Assume interest is compounded annually.

You want to have $30,000 for down payment on a house 4 years from now. If you can earn 3.5 percent annually on your savings, how much do you need to deposit today to reach your goal? You do not deposit or withdraw anything in to/from that account.

How much money should there be in a bank account today so that you can make annual withdrawal of $3,000 every year for the next 18 years and the balance becomes $11,000 after the 18^th withdrawal. Annual interest rate = 4%.

What is the present value of a lottery win that pays $100,000 every year for the next 22 years, assuming an annual return of 6%?

A bond pays you annually $600 forever. Assuming 6% annual interest rate, find the present value of the bond. Assume that the first payment comes in a year from today.

You want to start an endowment today that will pay for a finance lab at MSUB from next year. While next year the required amount for such a finance lab is $20,000, the amount will rise every year by 2% due to inflation. If the endowment is expected to make 6% annually, find out how much the endowment fund should be if you want to start it today. This is a growing perpetual cash flow problem.