Reference no: EM133125487
Questions - Answer the following items. Show your solutions in paper.
1. If 25,000 is deposited annually starting on January 1, 2021 and it earns 9%, how much will accumulate by December 31, 2030?
2. How much must be invested now to receive 50,000 for ten years if the first 50,000 is received today and the rate is 10%?
3. You deposited 1,000 in a savings account that pays 8 percent interest, com¬pounded quarterly, planning to use it to finish your last year in college. Eighteen months later, you decide to go to the Rocky Mountains to become a ski instructor rather than continue in school, so you close out your account. How much money will you receive?
4. What is the future value of a 5-year ordinary annuity with annual payments of 200, evaluated at a 15 percent interest rate?
5. Today is your 23rd birthday. Your aunt just gave you 1,000. You have used the money to open up a brokerage account. Your plan is to contribute an additional 2,000 to the account each year on your birthday, up through and including your 65th birthday, starting next year. The account has an annual expected return of 12 percent. How much do you expect to have in the account right after you make the final 2,000 contribution on your 65th birthday?
6. Today is Janet's 23rd birthday. Starting today, Janet plans to begin saving for her retirement. Her plan is to contribute 1,000 to a brokerage account each year on her birthday. Her first contribution will take place today. Her 42nd and final contribution will take place on her 64th birthday. Her aunt has decided to help Janet with her savings, which is why she gave Janet 10,000 today as a birthday present to help get her account started. Assume that the account has an expected annual return of 10 percent. How much will Janet expect to have in her account on her 65th birthday?
7. What is the present value of a 5-year ordinary annuity with annual payments of 200, evaluated at a 15 percent interest rate?
8. Finley Company will receive 500,000 in 7 years. If the appropriate interest rate is 10%, the present value of the 500,000 receipt is?
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