24 questions on attached PDF fileUse an Excel sheet to work out the problems and record the solutions

weeks_1_and_2_assignment.pdf

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Essentials of Finance

Weeks 1 and 2 Assignment

1. The Thailand Co. is considering the purchase of some new equipment. The quote

consists of a quarterly payment of $4,740 for 10 years at 6.5% interest. What is the

purchase price of the equipment?

2. The condominium at the beach that you want to buy costs $249,500. You plan to make

a cash down payment of 20% and finance the balance over 10 years at 6.7%. What will

be the amount of your monthly mortgage payment?

3. Today, you are purchasing a 15-year, 8% annuity at a cost of $70,000. The annuity will

pay annual payments. What is the amount of each payment?

4. Shannon wants to have $10,000 in an investment account three years from now. The

account will pay 0.4% interest per month. If Shannon saves money every month,

starting one month from now, how much will she have to save each month?

5. Trevor’s Tires is offering a set of four premium tires on sale for $450. The credit terms

are 24 months at $20 per month. What is the interest rate on this offer?

6. Top Quality Investments will pay you $2,000 per year for 25 years in exchange for

$19,000 today. What interest rate are you earning on this annuity?

7. You have just won the lottery! You can receive $10,000 per year for eight years or

$57,000 as a lump sum payment today. What is the interest rate on the annuity?

8. Around Town Movers recently purchased a new truck costing $97,000. The firm

financed this purchase at 8.25% interest with monthly payments of $2,379.45. How

many years will it take the firm to pay off this debt?

FIN 500: Essentials of Finance, Weeks 1 and 2 Assignment

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9. Expansion, Inc. acquired an additional business unit for $310,000. The seller agreed to

accept annual payments of $67,000 at an interest rate of 6.5 percent. How many years

will it take Expansion, Inc. to pay for this purchase?

10. You want to retire early so you know you must start saving money. Thus, you have

decided to save $4,500 per year, starting at age 25. You plan to retire as soon as you

can accumulate $500,000. If you can earn an average of 11% on your savings, how old

will you be when you retire?

11. You just received a credit offer in an email. The company is offering you $6,000 at

12.8% interest. The monthly payment is only $110. If you accept this offer, how long

will it take you to pay off the loan?

12. Fred was persuaded to open a credit card account and now owes $5,150 on this card.

Fred is not charging any additional purchases because he wants to get this debt paid in

full. The card has an APR of 15%. How much longer will it take Fred to pay off this

balance if he makes monthly payments of $70 rather than $85?

13. Bridget plans to save $150 per month, starting today, for 10 years. Jordan plans to save

$175 per month for ten years, starting one month from today. Both Bridget and Jordan

expect to earn an average return of 8% on their savings. At the end of the ten years,

Jordan will have approximately _____ more than Bridget.

14. What is the future value of weekly payments of $25 for six years at 10% interest?

15. At the end of this month, Bryan will start saving $80 per month for retirement through

his company’s retirement plan. His employer will contribute an additional $0.25 for

every $1.00 that Bryan saves. If he is employed by this firm for 25 more years and earns

an average of 11% on his retirement savings, how much will Bryan have in his

retirement account 25 years from now?

16. Sky Investments offers an annuity due with semi-annual payments for 10 years at 7%

interest. The annuity costs $90,000 today. What is the amount of each annuity

payment?

FIN 500: Essentials of Finance, Weeks 1 and 2 Assignment

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17. Mr. Jones just won a lottery prize that will pay him $5,000 per year for thirty years. He

will receive the first payment today. If Mr. Jones can earn 5.5 percent on his money,

what are his winnings worth to him today?

18. You want to save $75 per month for the next 15 years and hope to earn an average rate

of return of 14%. How much more will you have at the end of the 15 years if you invest

your money at the beginning of each month rather than the end of each month?

19. What is the effective annual rate of 10.5% compounded semi-annually?

20. What is the effective annual rate of 9% compounded quarterly?

21. Fancy Interiors offers credit to customers at a rate of 1.65% per month. What is the

effective annual rate of this credit offer?

22. What is the effective annual rate of 12.75% compounded daily?

23. Your grandparents loaned you money at 0.5% interest per month. The APR on this loan

is _____% and the EAR is _____%.

24. Three years ago, you took out a loan for $9,000. Over those three years, you paid equal

monthly payments totaling $11,826. What was the APR on your loan?

FIN 500: Essentials of Finance, Weeks 1 and 2 Assignment

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