Solve the following time value of money problems. Please show all of the information you entered into your calculator (like we did in class) as well as the final answer. You may ROUND all dollar amounts to the nearest dollar, all interest rates to one decimal, such as 6.1%, and all amounts of time to one decimal, such as 8.3 years or 23.4 months. Problem #5 - Due Wednesday, October 26, 2021 = 5 points a. You need $17,000 in five years but you only have $12,000 now. At what interest rate must you invest the money assuming the interest is compounded annually? b. You have a $20,000 note payable which is due in three years. How much money must you put into a savings account today in order to have enough money to pay off the debt on time assuming your savings account earns 3% interest compounded annually? c. You put $2,750 into an account earnings 4% interest compounded QUARTERLY. How much will be in this account at the end of 4 YEARS? d. In question b." above, if you leave he money in the account for one more YEAR, how much more interest will you earn in that additional year (Year 5)? e. How long will it take to double $2,000 to $4,000 assuming you invest the $2,000 into an account earning 7% interest compounded annually? Problem #6 - Due Friday, October 28, 2021 = 5 points f. You need $120,000 eight years from now and you plan to deposit $9,000 per year into an account at the END of each year for eight years. At what annual compound interest rate must this account grow in order for you to reach the goal of $120,000? g. You bought a new car for $25,000 and signed a 6% note to pay off the car loan with MONTHLY payments over the next 4 years. How much will your monthly payments be assuming the payments are made at the BEGINNING of each MONTH? h. Your grandfather is about to retire. He estimates he will need to withdraw $60,000 per year at the beginning of each year to take care of his personal needs and wants to be able to leave $200,000 for you when he passes away. He estimates he will live for 30 years after retirement. His retirement account earns 7.5% compounded annually. How much should he have in his account when he retires in order to meet these goals? i. You plan to put $5,000 into a Roth Individual Retirement Account (IRA) at the END of each year for the next 30 years. Assuming your IRA earns 5.5% interest compounded annually, how much will be in your account at the end of 30 years? j. You bought a new computer system for your company for $130,000 and agreed to make QUARTERLY payments of $6,000 at the END of each QUARTER. Assuming the computer company is charging you 8% interest compounded QUARTERLY, how many payments will you have to make in order to pay off the computer system
