To borrow $1,000, you are offered an add-on interest loan at 5 percent. Three loan payments are to be made, one at four months, another at eight months, and the last one at the end of the year.

Compute the three equal payments. (Round your answer to 2 decimal places.)

32. Your client has been given a trust fund valued at $1.15 million. He cannot access the money until he turns 65 years old, which is in 30 years. At that time, he can withdraw $22,500 per month.

If the trust fund is invested at a 4.0 percent rate, compounded monthly, how many months will it last your client once he starts to withdraw the money? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Number of months

33.

MC Qu. 153 Solving for Rates What annual rate of return is implied on a $am...

Solving for Rates What annual rate of return is implied on a $2,600 loan taken next year when $6,300 must be repaid in year 12?

11.86%

8.38%

7.65%

12.94%

Problem 4-27 Moving Cash Flows (LG5)

What is the value in year 9 of a $1,500 cash flow made in year 5 if interest rates are 8 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Value in year 9 $

Consider a $4,000 deposit earning 9 percent interest per year for 9 years.

What is the future value? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value $

How much total interest is earned on the original deposit? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total interest earned $

How much is interest earned on interest? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Interest earned on the interest $

2.

Assume that you contribute $190 per month to a retirement plan for 25 years. Then you are able to increase the contribution to $390 per month for the next 25 years. Given an 7 percent interest rate. What is the value of your retirement plan after the 50 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value of multiple annuities $

3.

Problem 4-41 Spreadsheet Problem (LG7)

Oil prices have increased a great deal in the last decade. The table below shows the average oil price for each year since 1949. Many companies use oil products as a resource in their own business operations (like airline firms and manufacturers of plastic products). Managers of these firms will keep a close watch on how rising oil prices will impact their costs. The interest rate in the PV / FV equations can also be interpreted as a growth rate in sales, costs, profits, and so on.

Average Oil Prices

Year Per Barrel Year

Per Barrel

Year

Per Barrel

1949 $ 2.54 1970 $ 3.18 1991 $ 16.54

1950 $ 2.51 1971 $ 3.39 1992 $ 15.99

1951 $ 2.53 1972 $ 3.39 1993 $ 14.25

1952 $ 2.53 1973 $ 3.89 1994 $ 13.19

1953 $ 2.68 1974 $ 6.87 1995 $ 14.62

1954 $ 2.78 1975 $ 7.67 1996 $ 18.46

1955 $ 2.77 1976 $ 8.19 1997 $ 17.23

1956 $ 2.79 1977 $ 8.57 1998 $ 10.87

1957 $ 3.09 1978 $ 9.00 1999 $ 15.56

1958 $ 3.01 1979 $ 12.64 2000 $ 26.72

1959 $ 2.90 1980 $ 21.59 2001 $ 21.84

1960 $ 2.88 1981 $ 31.77 2002 $ 22.51

1961 $ 2.89 1982 $ 28.52 2003 $ 27.54

1962 $ 2.90 1983 $ 26.19 2004 $ 38.93

1963 $ 2.89 1984 $ 25.88 2005 $ 46.47

1964 $ 2.88 1985 $ 24.09 2006 $ 58.30

1965 $ 2.86 1986 $ 12.51 2007 $ 64.67

1966 $ 2.88 1987 $ 15.40 2008 $ 91.48

1967 $ 2.92 1988 $ 12.58 2009 $ 53.48

1968 $ 2.94 1989 $ 15.86 2010 $ 71.57

1969 $ 3.09 1990 $ 20.03

a. Using the 1949 oil price and the 1979 oil price, compute the annual growth rate in oil prices during those 30 years. (Round your answer to 2 decimal places.)

Annual growth rate %

4.

Problem 4-40 Moving Cash Flows (LG5)

You are scheduled to receive a $480 cash flow in one year, a $980 cash flow in two years, and pay a $780 payment in three years. Interest rates are 10 percent per year.

What is the combined present value of these cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Combined present value of cash flows $

6.

Problem 4 and 5-1 Future Value

Consider that you are 45 years old and have just changed to a new job. You have $79,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $3,500 each year into your new employers plan.

If the rolled-over money and the new contributions both earn a 5 percent return, how much should you expect to have when you retire in 20 years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value $

7.

MC Qu. 151 Future Value At age age1 you invest $amt that earns rate1 percen...

Future Value At age 30 you invest $3,300 that earns 9.25 percent each year. At age 40 you invest $3,300 that earns 12.25 percent per year. In which case would you have more money at age 60?

At age 30 invest $3,300 at 9.25 percent.

Both yield the same amount at age 60.

At age 40 invest $3,300 at 12.25 percent.

There is not enough information to determine which case earns the most money at age 60.

8.

Problem 4 and 5-7 House Appreciation and Mortgage Payments

Say that you purchase a house for $260,000 by getting a mortgage for $230,000 and paying a $30,000 down payment. If you get a 30-year mortgage with a 6 percent interest rate, what are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

PMT $

What would the loan balance be in ten years? (Round the payment amount to the nearest cent but do not round any other interim calculations. Round your final answer to 2 decimal places.)

PVA $

If the house appreciates at 2 percent per year, what will be the value of the house in ten years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

FV $

How much of this value is your equity? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Equity $

11.Problem 4 and 5-6 Present Value and Annuity Payments

A local furniture store is advertising a deal in which you buy a $5,700 living room set with three years before you need to make any payments (no interest cost is incurred).

How much money would you have to deposit now in a savings account earning 6 percent APR, compounded monthly, to pay the $5,700 bill in three years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Present value $

How much would you have to deposit in the savings account each month to be able to pay the bill? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annuity payment $

Problem 5-32 Compound Frequency (LG7)

Payday loans are very short-term loans that charge very high interest rates. You can borrow $300 today and repay $369 in two weeks. What is the compounded annual rate implied by this 23 percent rate charged for only two weeks? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

17.Problem 5-36 Annuity Interest Rate (LG8)

What annual interest rate would you need to earn if you wanted a $600 per month contribution to grow to $54,500 in six years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual interest rate %

18.

Monica has decided that she wants to build enough retirement wealth that, if invested at 9 percent per year, will provide her with $4,500 of monthly income for 25 years. To date, she has saved nothing, but she still has 30 years until she retires.

How much money does she need to contribute per month to reach her goal? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Contribute per month $

19.Problem 5-37 Add-on Interest Payments (LG8)

To borrow $1,900, you are offered an add-on interest loan at 10 percent. Two loan payments are to be made, one at six months and the other at the end of the year. Compute the two equal payments.

Two equal payments $

22.Problem 5-50 Amortization Schedule (LG9)

Create the amortization schedule for a loan of $4,300, paid monthly over two years using an 9 percent APR. (Round your answers to 2 decimal places.)

Month Beginning

Balance Total

Payment Interest

Paid Principal

Paid Ending

Balance

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

23.What annual rate of return is earned on a $1,000 investment when it grows to $2,300 in six years? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual rate of return %

To borrow $3,000, you are offered an add-on interest loan at 11 percent with 12 monthly payments.

Compute the 12 equal payments. (Round your answer to 2 decimal places.)

Equal payment $

Compute the EAR of the loan. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

EAR %

27.

Ross has decided that he wants to build enough retirement wealth that, if invested at 6 percent per year, will provide him with $4,600 of monthly income for 30 years. To date, he has saved nothing, but he still has 20 years until he retires.

How much money does he need to contribute per month to reach his goal? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Contribute per month $