You are saving for a car that you plan to purchase in fiveyears. You plan to put $3,800 in savings (which earns 11%,compounded annually) at the end of each year until then. How muchwill you have saved for the car at the end of the five years?(Future Value of $1, Present Value of $1, Future ValueAnnuity of $1, Present Value Annuity of $1.) (Useappropriate factor from the PV tables. Round your final answer tothe nearest dollar amount.)
a. $22,266
b. $19,000
c. $23,666
d. $28,106
You are saving for a car that you plan to purchase in fiveyears. You plan to put $3,800 in savings (which earns 11%,compounded annually) at the end of each year until then. How muchwill you have saved for the car at the end of the five years?(Future Value of $1, Present Value of $1, Future ValueAnnuity of $1, Present Value Annuity of $1.) (Useappropriate factor from the PV tables. Round your final answer tothe nearest dollar amount.)
a. $22,266
b. $19,000
c. $23,666
d. $28,106
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Related questions
Part I:
Solve 4 of the following time value of money problems by filling inthe 4 columns to the right of the description.
Be sure to solve 1 problem from each of the following 4 categorieslisted under Problem Types. I have completed the first row as anexample.
Part II:
Discuss how you may use time value of money concepts in yourpersonal life. For example, saving for college tuition orretirement, paying off a car loan or home mortgage. Give specificdetails as to how you would use these formulas for more effectivedecision making. Create 1 description and fill in the table foryour newly created question.
Problem Types:
1 pv = present value of $1
2 fv = future value of $1
3 PVAo = Present Value of an Ordinary Annuity of$1 (payment at end of period)
4 FVAo = Future Value of an Annuity of $1(payment at end of period)
| Description | Type of Problem | Table | Formula | Answer | |
| 1 | How much money must your rich unclegive you now to finance four years of college, assuming an annualcost of $48,000 and an interest rate of 6% (applied to theprincipal until disbursed)? | Present Value of anordinary Annuity | PVAo | PV = 48,000(3.465) | $166,325.07 |
| 2 | How much interest would you earn ifyou deposited $300 at 6 percent for 27 months? | ||||
| 3 | If you deposit $2,000 in a 5-yearcertificate of deposit at 5.2%, how much will it be worth in fiveyears? | ||||
| 4 | How much interest would you pay toborrow $670 for eight months at 12 percent? | ||||
| 5 | You wish to borrow $18,000 to buy anew auto-mobile. Rate is 8.6% over five years with monthlypayments. Find the monthly payment. | ||||
| 6 | What is the future value of $800 at8 percent after six years? | ||||
| 7 | How much would you have in savingsif you kept $200 on deposit for eight years at 8% compoundedsemiannually? | ||||
| 8 | You choose to invest $50/month in a401(k) that invests in an international stock mutual fund. Assumingan annual rate of return of 9%, how much will this fund worth ifretiring in forty years? | ||||
| 9 | What is the future value of anannual deposit of $230 earning 6 percent for 15years? | ||||
| 10 | If you invest $600/Year in a 401(k)that invests in an international stock mutual fund. Assuming anannual rate of return of 9%, how much will this fund worth ifretiring in forty years? | ||||
| 11 | What amount would you have in aretirement account if you made annual deposits of $375 for 25 yearsearning 12 percent, compounded annually? | ||||
| 12 | What is the present value of $2,200earning 15 percent for eight years? | ||||
| 13 | How much money must you set asideat age 20 to accumulate retirement funds of $100,000 at age 65,assuming a rate of interest of 7%? | ||||
| 14 | To have $6,000 for a childâseducation in 10 years, what amount should a parent deposit in asavings account that earns 12 percent, compoundedquarterly? | ||||
| 15 | If you deposit $2,000 in a 5-yearcertificate of deposit at 5.2% with quarterly compounding, how muchwill it be worth in five years? | ||||
| 16 | What is the present value of awithdrawal of $200 at the end of each year for 14 years with aninterest rate of 7 percent? | ||||
| 17 | How much would you have to depositnow to be able to withdraw $650 at the end of each year for 20years from an account that earns 11 percent? | ||||
| 18 | What would be the annual paymentamount for a $20,000, 10-year loan at 7 percent? |
1) Sara Smith plans to have $50 withheld from her monthly paycheckand deposited in a savings account that earns 12% annually,compounded monthly. If Malone continues with her plan for one andone-half years, how much will be accumulated in the account on thedate of the last deposit? (Use TableB.4) (Round "FV factor"to 4 decimal places andfinal answer to 2 decimal places. Omit the "$" sign in yourresponse.) |
Amount in the account?
2) On January 1, 2011, a company agrees to pay $21,000 in fiveyears. If the annual interest rate is 3%, determine how much cashthe company can borrow with this agreement. (Use Table B.1)(Round "PV factor" to 4 decimal places and final answer to thenearest dollar amount. Omit the "$" sign in yourresponse.)
3) John Smith finances a new automobile by paying $5,800 cash andagreeing to make 20 monthly payments of $570 each, the firstpayment to be made one month after the purchase. The loan bearsinterest at an annual rate of 12%. What is the cost of theautomobile? (Use Table B.3)(Do not round intermediate calculations. Round "PV Factor" to 4decimal places and final answer to 2 decimal places. Omit the "$"sign in your response.)
