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Directions:  Please answer all questions on a separate piece of paper.  Show all work.  For any problems dealing with the time value of money, use of the tables (present and future values, lump sum and/or annuity) is an option you may employ for those problems which permit such use.
6.  Your employer gives you a stock bonus of $1,000 in your company at the beginning of each year.  You plan to retire in 20 years.  The stock has a growth rate of 15 percent per annum.  What will the value of your stock be in 20 years? 7.  Calculate the monthly payment on a $200,000 mortgage if payment is made at the beginning of each month and the annual interest rate is 12 percent for 30 years (Hint:  remember to treat this as an ordinary annuity).
Directions:  Please answer all questions on a separate piece of paper.  Show all work.  For any problems dealing with the time value of money, use of the tables (present and future values, lump sum and/or annuity) is an option you may employ for those problems which permit such use.
6.  Your employer gives you a stock bonus of $1,000 in your company at the beginning of each year.  You plan to retire in 20 years.  The stock has a growth rate of 15 percent per annum.  What will the value of your stock be in 20 years? 7.  Calculate the monthly payment on a $200,000 mortgage if payment is made at the beginning of each month and the annual interest rate is 12 percent for 30 years (Hint:  remember to treat this as an ordinary annuity).

Explanation / Answer

Answer 6

Value of stock in 20 years = (P/(r-g))*(1-(((1+g)/(1+r))^n)

                                               = (1000/(0-0.15))*(1-(((1+0.15)/(1+0))^20))

                                               = $102443.58

P= first payment

r=rate per period

g=growth rate

n= number of period

Answer 7

Monthly payment = PMT(rate per period,no of periods,present value,,1)

                                 = PMT(12%/12,360,200000,,1)

                                 = $2,036.86

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