Reference no: EM132991973

You are required to show the following four steps for each problem (sample problems and solutions are provided for guidance): (i) Develop a timeline (linear representation of the timing of cash flows). (ii) Identify the time value of money variable (PV, FV, PMT, N, or I/YR) that needs to be solved/calculated in the question. (iii) Identify the values of the remaining variables (PV, FV, PMT, N, or I/YR) from the question- be sure to show positive or negative signs for the appropriate variables. (iv) Calculate the correct value of the variable identified in Step (ii).

1) On the day Harry was born, his parents put $1,200 into an investment account that promised to pay a fixed interest rate of 6% per year. How much money will Harry have in this account when he turns 25 (round your answer to two decimal places)?

2) At what rate must $287.50 be compounded annually for it to grow to $625.75 in 10 years (round your answer to two decimal places)?

3) How much money must be put into a new bank account yielding 7.54%, compounded annually, in order to have $2,671 at the end of 15 years (round your answer to two decimal places)?

4) Cliff deposited $9,000 in a brokerage account, and 10 years later he closes out the account, which is worth $20,500. What annual rate of interest has he earned over the 10 years (round your answer to two decimal places)?

5) How much money do you need to place into a bank account that pays a 0.08% rate in order to have $500 at the end of 9 years (round your answer to two decimal places)?

6) Your great-grandparents deposit $1,500 each year on your birthday, starting the day you are born, in an account that pays 5% interest compounded annually. How much will you have in the account on your 21st birthday, just after your grandparents make their final deposit (round your answer to two decimal places)?

7) The firm "Auto Loans-R-Us" loans you $35,000 for six years to buy a car. The loan must be repaid in equal monthly payments. The annual interest rate on the loan is 6.50%. What is the monthly payment (round your answer to two decimal places)?

8) Your company has received a $40,170 loan from an industrial finance company. The annual payments are $5,405.80. If the company is paying 8.275% interest per year, how many loan payments must the company make (round your answer to two decimal places)?

9) You are ready to retire. A glance at your 403B statement indicates that you have $830,000. If the funds remain in an account earning 7%, how much could you withdraw at the beginning of each year for the next 20 years before the balance is zero (round your answer to two decimal places)?

10) If you wish to accumulate $150,000 in a child's college fund when they turn 18 years, and can invest at a 5.50% annual rate, how much must you invest at the end of each year if the first deposit is made when your child turns one year old (round your answer to two decimal places)