3) In 1930, the highest paid player in major league baseball was Babe Ruth of th

Question

3) In 1930, the highest paid player in major league baseball was Babe Ruth of the New York Yankees, with an annual salary of $80,000. In 2000, the highest paid player in major league baseball player was Alex Rodriguez, also of the New York Yankees, with a salary of $25,000,000. What was the average annual rate of growth in the top baseball salary over this time period?
A) 18.70% B) 4.17% C) 7.96% D) 8.55%

4) Your employer has agreed to place year-end deposits of $1,000, $2,000 and $3,000 into your retirement account. The $1,000 deposit will be one year from today, the $2,000 deposit two years from today, and the $3,000 deposit three years from today. If your account earns 7% per year, how much money will you have in the account at the end of year three when the last deposit is made?
A) $6,202.50 B) $6,000 C) $6,727.88 D) $6,284.90

5) The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal annual end-of-the-year payments of $1,100 each with the first payment to be made one year from today. If the discount rate is 6%, what is the present value of the furniture payments?
A) $2,940.31 B) $2,673.01 C) $3,183.60 D) $3,000.00

Explanation / Answer

3-C) 7.96%

4-A) $6,202.50

5-B) $2,673.01

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