Calculate the Present Value of this annuity

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Questions -

Q1. An annuity pays $5,000 per month for 5 years at an annual interest rate of 7.5% compounded monthly. Calculate the Present Value of this annuity.

Q2. How much interest should you receive to double your investment in 12 years? Use the rule of 72.

Q3. Suppose you deposit $10,000 in a bank account which pays 6% interest rate compounded annually. You plan to invest this money for 20 years but firstly, you would like to double the amount and then invest in a deposit which pays an annual interest rate of 7.5%, compounded monthly for the remaining period (from the time you double your initial amount till year 20). How much would you receive at the end of 20 years following this investment strategy?

Q4. Suppose you deposit an amount of $1,000 per month in your bank account which pays an annual interest rate of 8.25% compounded monthly, how much would you have in your account by the end of 12 years?

Q5. Suppose you are planning to buy a car after 3 years which requires a monthly instalment of $520 per month for 5 years. How much do you need to deposit in your account today to be able to buy your dream car? The interest rate throughout the period will be 7.5% compounded monthly.

Reference no: EM132924535

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