You need $24,856 at the end of 9 years
You need $24,856 at the end of 9 years
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You need $24,856 at the end of 9 years
Question
You need $24,856 at the end of 9 years, and your only investment outlet is an 10 percent long-term certificate of
deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. Use Appendix B and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
| a. | What single payment could be made at the beginning of the first year to achieve this objective? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
| Single payment made | $ |
| b. | What amount could you pay at the end of each year annually for 9 years to achieve this same objective?(Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
Amount to be paid
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loan
Question
Your uncle borrows $64,000 from the bank at 10 percent interest over the eight-year life of the loan. UseAppendix
D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
| a. | What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
| Annual payments | $ |
| b. | How much of his first payment will be applied to interest? To principal? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
| First Payment | |
| Interest | $ |
| Principal | $ |
| c. | How much of his second payment will be applied to each? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
| Second Payment | |
| Interest | $ |
| Principal | $ |
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Your parents have accumulated a $160,000 nest egg
Question
Your parents have accumulated a $160,000 nest egg. They have been planning to use this money to pay college
costs to be incurred by you and your sister, Courtney. However, Courtney has decided to forgo college and start a nail salon. Your parents are giving Courtney $31,000 to help her get started, and they have decided to take year-end vacations costing $11,000 per year for the next four years. Use 9 percent as the appropriate interest rate throughout this problem. Use Appendix A and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
| a. | How much money will your parents have at the end of four years to help you with graduate school, which you will start then? (Round your final answer to 2 decimal places.) |
| Funds available for graduate school | $ |
| b. | You plan to work on a master’s and perhaps a PhD. If graduate school costs $29,260 per year, approximately how long will you be able to stay in school based on these funds? (Round your final answer to 2 decimal places.) |
| Number of years |
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