- What is the future value of $20,000 received today if it is invested at 7.5% compounded annually for 4 years?
2 Marks
- Your father placed $4,000 in a Registered Education Savings plan for you. in 12 years,
the funds will be worth $30,000. What is the rate of return on the RESP? 2 Marks
- Aunty Laura puts $50,000 into a bank account earning 10%. You cannot withdraw the money until it doubles. How long will you have to leave the money in the account?
2 Marks
- In 4 years you are going to need $25,000 for a down payment on a house. If you invest at 6%, how much do you need right now?
2 Marks
- What is the total present value of $1,000 received in one year, $2,000 received in two
years, $3,000 received in three years and $7,000 received in 7 years if the discount rate is 8%?
4 Marks
- What is the total future value in 7 years from now of $1,000 received in one year,
$2,000 received in two years, $3,000 received in three years and $7,000 received in the seventh year if the rate is 8%?
4 Marks
- You win the lottery and are given the option of receiving $100,000 now or an annuity of
$10,000 at the end of each year for 10 years. Which option is most beneficial if the interest rate is 5% for the annuity payment? Show all calculations and ignore any tax implications.
2 Marks
- If the appropriate discount rate of the following cash flows is 9% compounded monthly, what is the present value of the cash flows?
3 Marks
Year
Cash Flow $ 1,000
750
4
1,500
SON
2 adet
9.
Your friend buys you a lottery ticket to will receive $100,000 per year forever, beginning one year present value of your winnings at a 5% discount rate!
Name:
day and you win. You and your heirs beginning one year from now. What is the
2 Marks
- What is the present value of 20 vears’ worth of $1,000 paymem
beginning of each year? Assume an interest rate of 4.23
‘s worth of $1,000 payments received at the
2 Marks
- Michael Corleone will loan you money on a”
“loan you money on a “five-for-six” arrangement; i.e. for every $5 Mes you today, you give him $6 one week from now. What is the EAR OT this be What is the APR of this loan?
3 Marks
- For each of the following, calculate the effect
Tollowing, calculate the effective annual rate (keep your answers to three decimal places in percentage form):
2 Marks
Stated Rate
12% 25%
Number of Times Compounded
Daily Continuously
- beginning three months from now, you want to be able to withdraw $500 each quarter
from your bank account to cover college expenses over the next three years. If the account pays 1% interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next three years? 3 Marks
- What is the future value of $15,000 in 15 years assuming an interest rate of 15%
compounded semi-annually?