You have $35,259.87 in a brokerage account, and you plan to deposit an additiona

Question

You have $35,259.87 in a brokerage account, and you plan to deposit an additional $2,500 at the end of every future year until your account totals $350,000. You expect to earn 11.7% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number.

2)What is the future value of a 10%, 5-year ordinary annuity that pays $550 each year? Round your answer to the nearest cent.

If this were an annuity due, what would its future value be? Round your answer to the nearest cent.

3)An investment will pay $100 at the end of each of the next 3 years, $300 at the end of Year 4, $500 at the end of Year 5, and $700 at the end of Year 6. If other investments of equal risk earn 9% annually, what is its present value? Round your answer to the nearest cent.

What is its future value? Round your answer to the nearest cent.

4)You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized over 6 years (72 months), and the nominal interest rate would be 10%, with interest paid monthly. What is the monthly loan payment? Round your answer to the nearest cent.   

What is the loan's EFF%? Round your answer to two decimal places

Explanation / Answer

1) PV = $35,259.87

PMT = $2,500

FV = $350,000

I/Y = 11.7%

N = ?

Solving for N, we have = 17 years

2) We can solve this by a financial calculator or by using MS-Excel or else we would have to calculate the FV individual cash flow and add them up together.

FV of ordinary annuity = PV * (1 + r) n = $3,357.81

FV of annuity due = [PV * (1 + r) n] * [1 + r] = $3,693.59

3) Present value = $$1,208.01

Future value = $2,025.95

4) Effective Annual Rate = (1 + Periodic Rate)m

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