Reference no: EM131669286

(1) "If you deposit $4,453 now at 4% interest, how much will you have at the end of 18 years?"

(2) "You are interested in buying a piece of real property that could be worth $324,000 in 7 years. Assuming that your money is worth 10.2%, how much will you be willing to pay for the property?"

(3) "A judge denied a 94-year-old woman s attempt to force a Lottery Commission to pay her $3.14 million winnings up front on the grounds that she otherwise won't live long enough to collect it all. The woman already received an immediate payment of $185,696, and she will receive 25 annual gross checks of $118,173. If a buyer offers to pay the woman $2 million for the 25 annual gross checks of $118,173, what is the buyer's annual interest rate? Enter your answer as a percentage between 0 and 100."

(4) What is the value of Y so that the two cash flows given below are economically equivalent for an annual compound interest of 4.7%? Note: Y could be positive or negative.

Cash flow I

Year 1: ($) 131

Year 2 : ($) 561

Year 3: ($) 59

Year 4: ($) 572

Year 5: ($) -108

Cash flow II

Year 1: ($) 0

Year 2: ($) Y

Year 3: ($)469

Year 4: ($) 0

Year 5: ($)195

(5) "If you deposit $262 now (n=0) and 2 years from now (n=2) you deposit $926 in a savings account that pays 8% annual interest, how much would you have 10 years from now?"

(6) "You are paying into a mutual fund that earns 6.4% annual compounded interest. If you are making an annual contribution of $6,000, how much will be in the fund in 32 years?"

(7) "Joe's starting salary as a mechanical engineer is $77,000. Joe is planning to place a total of 11.8% of his salary each year in mutual funds. Joe expects a 4% salary increase each year for the next 37 years of employment. If the mutual fund will average 8.8% annual return over the course of his career, how much money can Joe expect at retirement?"