se starting this year you decide to make deposits of $5,000 at the end of each year for the next five years in a bank account paying 10% interest.  If you currently have $3,000 in the account how much will you have at the end of five years?   1. $25,255.05   2. $36,742.22   3. $35,357.03   4. $30,272.35   5. $28,500.60

a. You need $17,000 in five years but you only have $12,000 now. At what interest rate must you invest the money assuming the interest is compounded annually? b. You have a $20,000 note payable which is due in three years. How much money must you put into a savings account today in order to have enough money to pay off the debt on time assuming your savings account earns 3% interest compounded annually? c. You put $2,750 into an account earnings 4% interest compounded QUARTERLY. How much will be in this account at the end of 4 YEARS? d. In question “b." above, if you leave he money in the account for one more YEAR, how much more interest will you earn in that additional year (Year 5)? e. How long will it take to double $2,000 to $4,000 assuming you invest the $2,000 into an account earning 7% interest compounded annually?

Savings Plan Suppose you deposit $450 monthly into an account for seventeen years. The account has an APR of 4.2% compounded monthly. a. Find the ending balance (after 17 years). Answer: $ _____________ b. How much of the ending balance is money you deposited? (HINT: Find the total deposits.) Answer: $ _____________ c. How much of the ending balance is interest? (Use your rounded answer to part a.) Answer: $ _____________

You have just opened a savings account which pays monthly interest at a rate of j12 = 5.5% p.a. You wish to accumulate $20,000 by depositing the same amount into the account at the end of each month, for 2 years, starting in a month's time. a) Determine the required size for the monthly deposit, R. Apply a sanity check. b) Construct a sinking fund table showing 24 deposits with a fixed interest rate of 5.5%. Describe and apply a sanity check to your table. c) Suppose that the interest rate is renewed every three months (quarterly) over the course of the two years as follows: Year 1 Q1 5.5% 02 Q3 2.8% 4.5% 04 01 4.0% 4.2% Year 2 Q2 04 03 3.8% 2.5% 7.5% If you maintain the same monthly deposit of R determined in part a), find the size of your sinking balance after two years. Will you meet your target of $20,000? Describe and apply a sanity check for your answer. d) Construct a sinking fund table showing 24 deposits with the variable interest rate. Describe and apply a sanity check to…

2. Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semiannually. If you make 20 consecutive semiannual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? $57,900.83 $58,988.19 O $52,821.19 O $64,131.50 O $62,527.47

3. Time Value of Money Assume that ten years from now, you will need $10,000 and that your bank compounds interest at a 4 percent annual rate. A. How much do you need to deposit today in order to have a balance of $10,000 in 10 years? Explain and show your work. B. Suppose instead that you want to make equal payments in years 1 through 9 to accumulate $10,000 in year 10, how large must each of the 9 payments be? Explain. C. If your (very reliable) uncle were to offer to make the payments found in part (B) for you or to give you $7,000 one year from now, which would you choose? Explain. (Even if you could not solve for the answer in part B, please explain what criterion you would use to make the choice.)4. Capital Asset Pricing Model 4. Capital Asset Pricing Model In parts (A), (B), and (C) below assume that the risk-free interest rate is 3 percent and the market risk premium is 7 percent. A. Dorothy Inc. is considering a project that will generate after-tax annual cash flows of…

7. Calculateannuity cash flows Your goal is to have $10,000 in your bank account by the end of twelve years. If the interest rate remains constant at 9% and you want to make annual identical deposits, what amount will you have to deposit into your account at the end of each year to reach your goal? $496.51   $397.21   $446.86   $595.81     If your deposits were made at the beginning of each year rather than an at the end, what is the amount your deposit would change by if you still wanted to reach your financial goal by the end of twelve years? $34.85   $30.75   $55.35   $41.00

3. Compound interest Old Time Savings Bank pays 4% interest on its savings account. If you deposit $1,000 in the bank and leave it there: a. How much interest will you earn in the first year? b. How much interest will you earn in the second year? c. How much interest will you earn in the tenth year?

You plan to invest $5,000 into an account.  If you would like to have $10,000 in 15 years,  what rate of return must you earn?   Question 5 options:   6.02%   5.24%   4.73%   7.55%   7.11%

4. If you deposit $4,500 at the end of each of the next 30 years into an account paying 7.9 percent interest, how much money will you have in the account in 30 years? How much will you have if you make deposits for 40 years?