A baseball player gets a base salary of $12 million per season plus $75,000 Per

Question

A baseball player gets a base salary of $12 million per season plus $75,000 Per home run over 30. If the hits 60 home runs next season, what will his salary be? a. $16.25 million b. $16 million c. $15.5 million d. $14.25 million 2. How much must you invest now in account with 6% interest to accumulate $1,500,000 in 25 years? a. $349,498 b. $245,124.33 c. $99,377.33 d. $156,450 3. How much must you invest now in an account with 6% interest compounded monthly to accumulate $1,500,000 in 25 years? a. $412,589.40 b. $335,948.52 c. $315,456.20 d. $299,456.15 4. what is the effective interest rate of 6% nominal interest compounded monthly? a. 6% b. 6.17% c. 6.3% d. 7.2% 5. If $5 invested today in a bank account becomes $12 in 6 months, what is the effective interest rate offered by the bank? a. 100% b. 356% c. 476% d. 510% 6. How long will it take for $20,000 invested at 8% per year, compounded continuously, to triple in value? a. 8.96 years b. 9.45 years c. 12.25 years d. 13.73 years

Explanation / Answer

Answer:1 d. $14.25 million

=12000000+($75000*(60-30))

=14.25 million

Answer:2 a. $349498

1500000/(1.06)^25

=$349398

Answer: 3 b. $335948.52

=1500000/(1+6%/12)^(25*12)

=$335948.52

Answer:4 b. 6.17%

EAR=(1+6%/12)^12-1

=6.17%

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