I need help please. I was able to get the formulas but I can\'t find the answers

Question

I need help please.

I was able to get the formulas but I can't find the answers

Thanks

Session 2

MGT 533

1.)  If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?

2.)  What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

3.)  Your parents will retire in 18 years.  They currently have $250,000 and they think they will need $1,000,000 at retirement.  What annual interest rate must they earn to reach their goal, assuming they don

Explanation / Answer

1. 10000*(1.1)^5= $16105.1

2.5000/((1.07)^20) = $ 1292.09

3.(1000000/250000)^(1/18)-1=0.08 ==>8%

4.consider you deposit x amount of money today.

2*x=x*1.065^(n)

=> n=11 years

5.Consider that it will get upto $250000 mark in n years. The equation that will form will be

42180.53*(1.12)^n+5000(1+1.12+1.12^2+1.12^3.........1.12^(n-1)) =250000

Solving for n will be equal to= 11

6. The present value of the whole would be 682.63 $

Future value at the end of 6 yrs will be $1083.2512

7. The monthly loan payment would be $ 606

The EAR would be $16333.337 and the monthly rate of interest has been taken as 12%/12= 1%

8.

A. 7412$

B. 1360$

C. 2000 $

9. All the three contracts are compared with the NPV values

NPV for 1st=$ 10460555

NPV for 2nd =$ 11789631

NPV for 3rd =$ 9486851

As seen from the NPV values the second contract should be favoured

10. Bank A should be preferred since the EAR is greater than the Bank B

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