Reference no: EM132527517

Question 1 "Part of the income generated by an ice cream machine is saved to purchase a new machine in the future. If $6,233 is deposited annually at 5% interest, how many years must the current machine last before a new machine costing $46,331 can be purchased? The first deposit will occur exactly one year from now. (Enter your answer in number of years as an integer.)"

Question 2 "You are interested in buying a piece of real property that could be worth $256,000 in 12 years. Assuming that your money is worth 7.4%, how much will you be willing to pay for the property?"

Question 3"A professional baseball player signs a contract for $161 million to play with a team for 7 years. He and his team agree that the contract will be spread out so that the player is paid beyond the 7 years. The payment plan for the contract is as follows:
$19 million each year for years 1 through 7.
$3.1 million each year for the next 11 years.
$1.0 million each year for the next 8 years.
You should assume that the baseball team will pay the player annually at the end of each year and that he will receive the first $19 million at the end of the first year. The player receives money for 26 years.

The player had previously rejected a contract that would have paid $150 million for 7 years in which the $150 million would be paid in 7 equal installments (i.e., $21.43 million per year). The first payment would be made at the end of the first year.
Assume the player will invest every dollar that he receives in an account that pays 4.6% interest compounded annually. Enter the amount in millions of dollars of the contract that would result in the most money at the end of 26 years for the player."

Question 4: "You establish an Individual Retirement Account (IRA) with an interest rate of 7.4%, compounded annually. You plan to deposit $2200 at the end of each year for a total of 34 years. However, you only deposit $734 at the end of year 6. If you deposit $2200 in the other 33 years (i.e., years 1-5 and years 7-34), how much do you have in the IRA at the end of 34 years?"

Question 5 "You make the following deposits in a bank that earns 3% interest:
09/30/2017 $1,048
02/16/2018 $4,312
08/24/2018 $597
12/26/2018 $1,335
03/15/2019 $736
06/17/2019 $1,904
You withdraw all the money at the end of 2020. How much money will you withdraw at the end of the year 2020? In your calculations, you should follow the convention that all deposits made during the year are lumped together at the end of the year. For example, any deposits made in January through December 30 can be considered as being deposited on December 31."

Question 6 "You are paying into a mutual fund that earns 5% annual compounded interest. If you are making an annual contribution of $8,000, how much will be in the fund in 22 years?"

Question 7 "What is the future value at the end of year 9 of an investment that starts at $3,500 and grows by 8.6% per year for 9 years. ($3,500 is invested at the end of year 1). The interest rate is 10.1% compounded annually."