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_1_. Complete the tables and answer the question. Just type in the

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_1_. Complete the tables and answer the question. Just type in the Powered By Docstoc
					(1). Complete the tables and answer the question. Just type in the answers into the essay
box so far example (a) Table Factor X, Future Value $ X



Present Value Rate Time Compount Frequency Table Factor Future Value

$5,000         12% 2yrs.     Annual        2         1.2544        $6,272

$5,000         12% 2yrs. Semiannual        4         1.26248       $6,312.4

$5,000         12% 2yrs . Quaterly         8         1.26677       $6,333.85

$5,000         12% 2 yrs    Monthly      24         1.26973        $6,348.65



(2). Cindy has decide to retire in 24 years. She has $30,000 available today and wants to
invest the money to supplement her pension plan.

(b). Assune Cindy wants to accumulate $150,000 by her retirement date. Will she achieve
her goal if she invests $30,000 today and earn 6 percent? Show your calculation to support
your yes/no answer

FV = PV(1.06)24 = $30,000(4.04893)=$121,468

Answer : No,she won´t achieve $150,000



(a). If Cindy invests a total of $30,000 through a series of 24 equal annual installment at the
end of the year instead of a single amount, would Cindy accumulate the desire $100,000 at
the 6 percent annual interest? The first first investment would be made one year from today.
Please show your calculation to support your answer.

Each payment is $30,000/24=$1250

Using table 2 factor value = 50.81558

So amount = $1250(50.81558)=$63,519.48

Answer: No, she will achieve less than 100,000
(3). Rusty Smith plans to choose one of three investments

(A) Pays $2,500 at the end of each year for three years.

Investment (B) Pays $8,500 at the end of five years.

Investment (C) Pays $1,000 at the end of each years and pay $4,000 at the end of the fifth
year.

Rusty requires a rate of 7 percent on each of these investments.

(a). What is the present value of investment A?

PV =                          = $ 6,560.79

Answer: $ 6,560.79



(b). What is the present value of investment B?

PV =         = $ 6,060.38

Answer: $ 6,060.38

(c). What is the present value of investment C?

PV =                                              =$4,100.2

Answer: $4,100.2



4. You have decide to purchase a boat. You have found a well-running boat that will cost
you $29,500. You can finance your purchase through the dealer at an annual rate of 24
percent for 24 months. The dealer requires a down payment of $8,000.

(a). What will be the amount of your monthly payment

From the factor table r = 0.24/12=0.02, n=24 then factor =18.91393

Initial amount= $29,500 - $8,000= $ 21,500

Each payment = $21,500/18.91393 = $ 1136.728
Answer: $ 1136.728




(b). What will be the total amount paid to the dealer over the life of the loan.

$ 8,000+24($ 1136.728)= $ 35,281.47

Answer: $ 35,281.47

(c). What will be the total amont of insterest paid

I=$ 35,281.47- $ 29,500= $ 5,781.47

Answer: $ 5,781.47

				
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