Reference no: EM132752352

Question 1.You are considering an investment that will pay $20000 a year for eight years, starting one year from today.

Required:

a. How much should you pay for this investment if you wish to earn a 11.5% rate of return?

b. How much should you pay for this investment if the payment is at the beginning of each year with the rate of return of 11% only?

Question 2. You need to save aside $320,000 for your retirement plan 10years from now. You have a saving of $120,000 and is consider to put exactly an equal amount of money into Sustainable Investment Fund at the end of each month for 10years to get 200 000 you still short of now. The fund is offering a rate of return10.5 % per year, compounding monthly.

Required:

a) Calculate the monthly payment you need to contribute into Sustainable Investment Fund to get $200,000 after 10years?

b) If you change to contribute $1,000/month to that fund at the beginning of each month, how much money you would have in your account after 10years?

c) You are offered an investment that will pay $24000 for the first year and then it will increase 4% each year. What is present value of this investment if the rate of return 13.5% applies?

Question 3. Lisa decided to borrow 350000from Commonwealth Bank to buy her new home. The bank offers Lisa the lending rate of 4.83% per year (compounding monthly) and she is expected to make an equal mortgage payment each month for 30 years.

Required:

a) Calculate monthly payment Lisa needs to make for the mortgage?

b) Lisa would like to buy some furniture for the new home. Good Home Furniture offered her the maximum payment credit for the furniture she can buy of $50 a week for one year. The annual interest rate of that commercial loan is8.5%,assuming compounding weekly. How much worth of furniture can Lisa afford to purchase using the credit offered by the store?