What is the maximum amount your scholarship

Assignment Help Financial Management

Reference no: EM131985311

1. What is the future value of a 15-year annuity that pays $115 each year if the first payment is made today and the interest rate is 6.1 percent, annually compounded? Round your answer to the nearest cent.

Find the FV of an ordinary annuity and multiply the answer by (1+r).

2. You wish to set up a scholarship fund for future Webster University students. You have $103601 to invest and you expect that you can earn 5.2 percent per year on this investment. What is the maximum amount your scholarship will be able to pay out each year? Round your answer to the nearest cent.

Use the perpetuity formula to solve for payment: PV=PMT/r

3. You anticipate you will need $1161 for the down payment on a new BMW 8 years from now. You expect you can earn 7.1 percent, monthly compounded, if you invest money today. How much will you have to invest today to reach your goal? Round your answer to the nearest cent.

Use the PV formula

4. The interest rate on a savings account is 10.2 percent, compounded daily. Assume there are 365 days in a year. What is the effective annual rate (EAR or EFF%) on this account? Round to four decimal places.

5. Berkley Trucking recently purchased a new truck. The firm financed this purchase at 4 percent interest (monthly compounded) with monthly payments of $923. The debt will be paid off after 36 months. How much did the truck cost? That is, find the present value of this monthly annuity. Round your answer to the nearest cent.

6. Berkley Trucking recently purchased a new truck costing $147,800. The firm financed this purchase at 7.1 percent interest (monthly compounded) with monthly payments of $2063. How many months will it take the firm to pay off this debt (i.e., until the future value is 0)? Round your answer to the nearest month.

Reference no: EM131985311

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