If you invest $33,000 at 7% interest, how much will you have in 14 years? Use Ap

Question

If you invest $33,000 at 7% interest, how much will you have in 14 years? Use Appendix A. (Round "FV Factor" to 3 decimal places.)

$45,804

$12,804

$85,107

$139,879

How much must you invest at 12% interest in order to see your investment grow to $20,000 in 14 years? Use Appendix B. (Round "PV Factor" to 3 decimal places.)

$3,466

$4,100

$3,501

none of these

To save for her newborn son's college education, Lea Wilson will invest $12,000 at the beginning of each year for the next 15 years. The interest rate is 8 percent. What is the future
value? Use Appendix C. (Round "FV Factor" to 3 decimal places.)

$324,379.

$351,888.

$363,888.

$38,064.

The IF for the future value of an annuity is 9.200 at 9% for 7 years. If we wish to accumulate $32,000 by the end of 7 years, how much should the annual payments be? Use Appendix C. (Round "FV Factor" to 3 decimal places.)

$4,254

$3,754

$3,478

none of these

Mr. Blochirt is creating a college investment fund for his daughter. He will put in $9,000 per year for the next 12 years and expects to earn a 7% annual rate of return. How much money will his daughter have when she starts college? Use Appendix C. (Round "FV Factor" to 3 decimal places.)

$149,979

$148,966

$160,992

161,719

Mr. Nailor invests $19,000 in a money market account at his local bank. He receives annual interest of 12% for 11 years. How much return will his investment earn during this time period? Use Appendix A. (Round "FV Factor" to 3 decimal places.)

$5,453

$63,785

$47,101

$66,101

Lou Lewis borrows $30,000 to be repaid over 11 years at 8 percent. Repayment of principal in the first year is: Use Appendix D. (Round "PV Factor" to 3 decimal places. Round your intermediate calculations to the nearest dollar value.)

$1,886

$1,802

$2,029

$4,202

the $1.08 million dollars in 50 years.

$3,240 today.

she should be indifferent.

need more information.

Pedro Gonzalez will invest $30,000 at the beginning of each year for the next 8 years. The interest rate is 7 percent. What is the future value? Use Appendix C. (Round "FV Factor" to 3 decimal places.)

$307,800.

$329,340.

$320,376.

$359,340.

Ambrin Corp. expects to receive $7,000 per year for 12 years and $8,500 per year for the next 12 years. What is the present value of this 24 year cash flow? Use an 9% discount rate. Use Appendix D. (Round "PV Factor" to 3 decimal places. Round your intermediate calculations to the nearest dollar value.)

$71,796

$82,538

$110,996

none of these

Dr. J. wants to buy a Dell computer which will cost $2,800 two years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn 6% annual return. How much should he set aside? Use Appendix C. (Round "FV Factor" to 3 decimal places and your final answer to 2 decimal places.)

$1,409.22

$1,359.22

$1,334.22

$1,459.22

Mike Carlson will receive $29,000 a year from the end of the third year to the end of the 20th year (18 payments). The discount rate is 9%. The present value today of this deferred annuity is: Use Appendix B and Appendix D. (Round "PV Factor" to 3 decimal places.)

$195,080

$228,532

$208,274

$213,804

You will deposit $8,000 today. It will grow for 7 years at 10% interest compounded semiannually. You will then withdraw the funds annually over the next 5 years. The annual interest rate is 8%. Your annual withdrawal will be: Use Appendix A and Appendix D. (Round "PV Factor" and "FV Factor" to 3 decimal places.)

$2,700

$3,967

$7,214

$5,222

Carol Thomas will pay out $16,000 at the end of the year 2, $18,000 at the end of year 3, and receive $20,000 at the end of year 4. With an interest rate of 14 percent, what is the net value of the payments vs. receipts in today's dollars? Use Appendix B. (Round "PV Factor" to 3 decimal places.)

$ 15,828.

$ 12,614.

$24,454.

$36,294.

Sharon Smith will receive $1.08 million in 50 years. The discount rate is 12%. As an alternative, she can receive $3,240 today. Which should she choose? Use Appendix B. (Round "PV Factor" to 3 decimal places.) Use Appendix B for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

Explanation / Answer

1.

Amount after 14 years = $33,000 * (1 + 0.07)14 = $33,000 * 2.579 = $85,107

2.

Amount to be invested = $20,000 / (1 + 0.12)14 = $4092.49 i.e. $4,100

3.

Since the investments are made at the beginning of each year, no. of periods for interest shall be 16.

Future value of annual investment = $12,000* {(1 + 0.08)16 – 1}/0.08 = $12,000 * 3.324 = $363,888

4.

Amount required after $32,000

IF = 9.200

Amount to be invested annually = $32,000 / 9.200 = $3,478

5.

Future value of annual investment = $9,000* {(1 + 0.07)12 – 1}/0.07 = $9,000 * 17.888 = $160,992

6.

Amount received by Mr. Nailor after 11 years = $19,000 * (1 + 0.12)11 = $66,101

Return on investment = $66,101 - $19,000 = $47,101

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