(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
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
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