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FIN 350 Managerial Finance Assignment #3

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Question;1. If you save $150;per month for the next ten years, $225 per month for the following 10 ten;years, and $350 per month for the following ten years, how much will you have;30 years from now assuming that the account earns 8% for the first ten years;10% for the next ten years, and 6% per year for the final 10 years. Assumebeginning of month;payments. (7 pts.);2. If an insurance;company offers you annuity payments of $40,000 per year for the first 10 years;of retirement and $50,000 per year for the next 10 years, what would you be;willing to pay for this annuity if you have a required rate of return of;7.6%? Assumebeginning of year;payments. (3 points);3. You just bought a;car and borrowed $22,000 from the bank to help with the purchase. Your monthly payments will be $415 for five;years. What is the annual rate of;interest you are paying on this loan and what will be the remaining principal;immediately after the first payment is made?;(4 pts.);4. You have decided;to start saving for your daughter?s wedding, which you estimate will cost about;$20,000. You will start making $300;monthly payments exactly one month from today into an account earning a 4%;annual rate of return. How long (to the;nearest month) will it take you to have the money for the wedding? (2 pts);5. Explain why the;future value of an annuity due is greater than the future value of an ordinary;annuity (all else being equal), and why the present value of an annuity due is;always higher than the present value of an ordinary annuity (again, all else;being equal). (2 pts.);6. Explain the;relationship between interest rates and present values. Why is this?;(2 pts.)

 

Paper#49596 | Written in 18-Jul-2015

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