Reference no: EM132903884

Questions -

Q1) Suze Orman wants to pay $1,500 semiannually to her granddaughter for 10 years for helping her around the house. If Suze can invest money at 6% compounded quarterly, how much must she invest today to meet this goal?

Q2) After paying off a car loan or credit card, don't remove this amount from your budget. Instead, invest in your future by applying some of it to your retirement account. How much would $450 invested at the end of each quarter be worth in 10 years at 4% interest?

Q3) You decide to reduce the amount you spend eating out by $150 a month and invest the total saved at the end of each year in your retirement account. How much will the account be worth at 5% in 15 years?

Q4) Rob Herndon, an accountant with Southwest Airlines, wants to retire 50% of Southwest Airlines bonds by 2038. Calculate the payment Rob needs to make at the end of each year at 6% compounded annually to reach his goal of paying off $300,000 in 20 years?

Q5) Bankrate.com reported on a shocking statistic: only 54% of workers participate in their company's retirement plan. This means that 46% do not. With such an uncertain future for Social Security, this can leave almost 1 in 2 individuals without proper income during retirement. Jill Collins, 20, decided she needs to have $250,000 in her retirement account upon retiring at 60. How much does she need to invest each year at 5% compounded annually to meet her goal? Tip: She is setting up a sinking fund.

Q6) If you saved an average of $2,900 each year from your income tax return, $1,050 for not buying vendor coffee, and $2,400 (saving $200 each paycheck), how much would you have in your retirement account if you were able to invest this annual savings at the end of each year for 30 years at 5% interest compounded annually?

Q7) Alice Longtree has decided to invest $400 quarterly for 4 years in an ordinary annuity at 8%. As her financial adviser, calculate for Alice the total cash value of the annuity at the end of year 4.

Q8) At the beginning of each period for 10 years, Merl Agnes invests $500 semiannually at 6%. What is the cash value of this annuity due at the end of year 10?

Q9) Jeff Associates needs to repay $30,000. The company plans to set up a sinking fund that will repay the loan at the end of 8 years. Assume a 12% interest rate compounded semiannually. What must Jeff pay into the fund each period of time?

Q10) You are earning an average of $46,500 and will retire in 10 years. If you put 20% of your gross average income in an ordinary annuity compounded at 7% annually, what will be the value of the annuity when you retire?

Q11) Mike Macaro is selling a piece of land. Two offers are on the table. Morton Company offered a $40,000 down payment and $35,000 a year for the next 5 years. Flynn Company offered $25,000 down and $38,000 a year for the next 5 years. If money can be invested at 8% compounded annually, which offer is better for Mike?