Your investment account pays 8.0%, compounded annually. If you invest $5,000 today, how many years will it take for your investment to grow to $9,140.20?a. 5.14b. 5.71c. 6.35d. 7.05e. 7.84ANS: EI/YR 8.0%PV $5,000.00PMT $0FV $9,140.20N 7.84 92. Your investment advisor has recommended your invest in bonds that pay 6.0%, compounded annually. If you invest $10,000 today, how many years will it take for your investment to grow to $30,000?a. 12.37b. 13.74c. 15.27d. 16.97e. 18.85ANS: EI/YR 6.0%PV $10,000.00PMT $0FV $30,000.00N 18.85 93. You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?a. $11,973b. $12,603c. $13,267d. $13,930e. $14,626ANS: CN 3I/YR 5.2%PV $0.00PMT $4,200FV $13,266.56 94. You want to buy new kitchen appliances 2 years from now, and you plan to save $8,200 per year, beginning one year from today. You will deposit your savings in an account that pays 6.2% interest. How much will you have just after you make the 2nd deposit, 2 years from now?a. $15,260b. $16,063c. $16,908d. $17,754e. $18,642ANS: CN 2I/YR 6.2%PV $0.00PMT $8,200FV $16,908 95. You would like to travel in South America 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will return 8.5% per year. Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?a. $18,369b. $19,287c. $20,251d. $21,264e. $22,327ANS: AN 5I/YR 8.5%PV $0.00PMT $3,100FV $18,369 96. You want to purchase a motorcycle 4 years from now, and you plan to save $3,500 per year, beginning immediately. You will make 4 deposits in an account that pays 5.7% interest. Under these assumptions, how much will you have 4 years from today?a. $16,112b. $16,918c. $17,763d. $18,652e. $19,584ANS: ABEGIN ModeN 4I/YR 5.7%PV $0.00PMT $3,500FV $16,112Alternative setup:0 1 2 3 4$3,500 $3,500 $3,500 $3,500 FV = $16,112 97. You want to open a sushi bar 3 years from now, and you plan to save $7,000 per year, beginning immediately. You will make 3 deposits in an account that pays 5.2% interest. Under these assumptions, how much will you have 3 years from today?a. $20,993b. $22,098c. $23,261d. $24,424e. $25,645ANS: CBEGIN ModeN 3I/YR 5.2%PV $0.00PMT $7,000FV $23,261Alternative setup:0 1 2 3$7,000 $7,000 $7,000 $7,000 FV = $23,261 98. What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5%?a. $16,576b. $17,449c. $18,367d. $19,334e. $20,352
ANS: E
N 10
I/YR 5.5%
PMT $2,700
FV $0.00
PV $20,352
99. What is the PV of an ordinary annuity with 5 payments of $4,700 if the appropriate interest rate is 4.5%?
a. $16,806
b. $17,690
c. $18,621
d. $19,601
e. $20,633
ANS: E
N 5
I/YR 4.5%
PMT $4,700
FV $0.00
PV $20,633
100. Your friend offers to pay you an annuity of $2,500 at the end of each year for 3 years in return for cash today. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?
a. $5,493.71
b. $5,782.85
c. $6,087.21
d. $6,407.59
e. $6,744.83
ANS: E
N 3
I/YR 5.5%
PMT $2,500
FV $0.00
PV $6,744.83
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