Reference no: EM133107190

Questions -

Q1. Assume you will invest $100 per month in an investment earning 11% per year (assume monthly compounding). After 10 years, you stop making the monthly payment. The money you have accumulated after 10 years remains invested and continues to earn 11% (compounded annually) for an additional 20 years (with no further payments made). How much do you have at the end of the total 30 year period?

Q2. You borrowed $200,000 to purchase a new home. How much is your monthly home mortgage payment if the annual interest rate is 4.5% and the number of years is 15?

Q3. You invest $6,000 per year for 20 years. Earning an 8% annual return, how much money do you have at the end of the 20 years?

Q4. Jimbo plans to have $500,000 in a special retirement account when he retires in 22 years.  If he plans to earn 10.5% on his investments, how much will he have to invest per month, in order to have the $500,000?

Q5. You wish to buy a cabin in 15 years. today, the cabin costs $150,000. You believe the price of the cabin will inflate at 4% annually. You want to invest a single amount of money (lump sum) today and have the money grow to equal the future purchase price of the cabin 15 years from now. If you can earn 10% annually on your investments, how much do you need to invest now, in order to be able to purchase the cabin?

Q6. You invest all the money you earned during your summer sales job (a total of $45,000) into the stock of a company that produces fat and carb-free Cheetos. The company stock is expected to earn a 14% annual return; however, five years later it is only worth $20,000. Turns out there wasn't as much demand for fat and carb-free Cheetos as you had hoped. What is the annual rate of return on your investment?

Q7. Linda would like to have a retirement account with $3,000,000 in it on the day she retires 40 years from now.  She is going to target a rate of return of 11.0% on her investments.  How much does she need to invest each month, in order to reach her goal of $3,000,000 in 40 years?

Q8. You have a home loan for $200,000. The annual interest is 5.5% and the number of payments (monthly payments) is 360. How much total interest do you pay over the life of the loan?

Q9. Tom wants to retire in 20 years and move back to his home town. He would like his investments to be worth $1,200,000 when he does so. Assuming a rate of return of 12.5%, how much does Tom need to save each month, in order to reach his goal?

Q10. Cindy is planning to invest $1,000 per month. Her goal is to have $1,000,000.  She will earn 10.0% on her investments. How many months will it take her to reach her goal?