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##### Unit 4 Assignment - Finance

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Question;1;What will a deposit of \$5,000 left in the;bank be worth under the following conditions?;Left for 5 years at 6% interest?;Left for 5 years at 6% interest;compounded monthly?;Left for 5 years at 6% interest;compounded continuously?;Left for 10 years at 6% interest?;Left for 10 years at 8% interest?;2;Your firm has a \$10,000 note receivable due;from a customer. How much is the note worth today if;The note is due in 2 years and the;discount rate is 8%?;The note is due in 3 years and the;discount rate is 15%?;The note is due in 3 years and the;discount rate is 10% compounded monthly?;3;How much will the following people have for;retirement?;Alex deposits \$100 a month for 20;years with a 6% return.;Beth deposits \$100 a month for 30;years with a 6% return.;Chris deposits \$100 a month for 30;years with a 9% return.;4;A lottery prize advertised as "\$1;million" is actually paid as \$25,000 a year for 40 years.;Find the present value of the;\$25,000 a year for 40 years using a 5% discount rate.;Find the present value using an 8%;discount rate.;The winner of this lottery is;offered \$500,000 now instead of the series of payments that total \$1 million.;If this person believes that they can earn 5% interest, which option should;they pick? Explain.;5;Find the monthly payments for a \$15,000 car;loan with the following terms. Also find the total amount that will be paid;over the life of the loan.;4 year loan at 8% interest;(compounded monthly);Total paid;6 year loan at 12% interest;(compounded monthly);Total paid;6;Find the amount that must be saved each year;to reach the following goals.;Darby needs \$20,000 in 10 years and;can receive 4% interest.;Fran needs \$800,000 in 35 years and;can receive 8% interest.;7;George has \$20,000 in credit card debt at;18% interest compounded monthly. How many months will it take to pay off this;amount;If he makes a \$350 payment each;month?;If he makes a \$520 payment each;month?;8;What is the interest rate on loans with the;following terms?;On \$10,000 borrowed, pay \$2,000 a;year for 6 years.;On \$2,000 borrowed, pay \$100 a month;for 25 months.;9;Answer these questions;Jack deposits \$3,000 a year at 4%;interest. In how many years will he have \$50,000?;How many years would it take \$100 to;become \$1,000 at 15% interest?;You have paid \$1,000 for an;investment that will pay back \$1,200 in 3 years. What interest rate does that;represent?;A preferred stock is expected to;pay an \$8 annual dividend every year forever. If comparable market interest;rates are 9%;what is the value of this stock?;10;Answer these additional questions;Amy's parents deposited \$10,000 in;a savings account earning 3% interest compounded monthly when she was born.;How much will the account have when;Amy is 21 years old?;Beth is to receive \$5,000 in 10;years. If Beth could be earning an 11% return on this money, what is it's;present value?;Cameron has been depositing \$50 a;month into a 6% account for the last 5 years. How much is in his account?;Dave has recently retired, and is;being paid an annuity of \$24,000 a year for the rest of his life.;Statistically, he expects to live;for 18 years. Using a 7% discount rate, find the present value of the;annuity.

Paper#48022 | Written in 18-Jul-2015

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