Reference no: EM131877426

Question - Answer each independent question below.

1. You plan on buying a new home in four years and want to have a $15,000 down payment at that time. If the bank pays interest of 6 percent, how much should you deposit today to reach your goal?

2. The Hoefts invested $7,000 in a savings account paying 6% annual interest when their daughter, Laurel, was born. They also deposited $1,000 on each of her birthdays until she was 18 (including her 18th birthday). How much will be in the savings account on her 18th birthday (after the last deposit)?

3. Your lemonade company is considering investing in the High Output Automatic Ice Maker; the machine costs $2,600 and you've estimated that it will increase net cash flows by $700 per year for 4 years at which time it will be sold for $250. Using an interest rate of 10% what is the net present value of the investment?

4. You recently purchased a new car for $24,000 by agreeing to make equal annual payments for 4 years. If the interest rate on your loan is 6 percent, how much is each payment?

5. You have recently opened a retirement account and decided to deposit $5,000 a year in the account. If you want to retire in 45 years and the account earns 8 percent interest, how much will he have in your account when you retire?

6. You recently received a birthday gift of $1,500 and you decide to save it for later use. If you deposit it into an investment account that pays 6% interest, how much will be in the account in 8 years?

7. The Edwards Company has decided to invest in a project that is expected to produce the following cash flows: $8,000 in year 1, $10,000 in year 2 and $12,000 in year 3. The project would require a $15,000 investment. What is the net present value of the project assuming an interest rate of 10 percent?