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Question 6. One day, a letter arrives in your mailbox. The letter comes from a trusted attorney
firm, indicating that you have inherited $500,000 USD from a long lost relative, and that such
amount has been accumulated over the last 50 years thanks to
know from family hearsay that the initial amount was 50 times smaller than the current
amount. What was the original interest rate?」
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- Q2. Your grandmother deposited $10,000 in an investment account on the day you were born to help pay the tuition when you go to college. If the account was worth $50,000 seventeen years after she made the deposit, what was the rate of return on the account?Question 5: When you were born, your parents started to deposit monthly $2,000 in the bank. The bank offers a fixed interest rate of 15 percent. On your 18th birthday, your parents decide to withdraw the money that they deposited to pay for your college tuition. How much money can they expect to withdraw?6: You invest $10000 today for 9 years at 6% interest. What is the total amount of interest on interest earned over the life of the investment? You invest $2000 today at 7% per year. 7: If you leave this for your grandchildren by not touching the account for 80 years, what is the amount of interest on interest earned for this investment? please also explain how to solve this using a financial calculator. The most important thing is that I understand so I can solve this on my own Thank You
- Solve on the paper onlys Q) At the end of year 5 Joe starts to withdraw $14500 from his savings account. If he takes out the same amount each year and the interest rate is 14%, what was Joe's initial investment assuming the account will be depleted at the end of year 25Mr. X will retire at the age of 60 years. He wishes to have an amount of $200,000 in his account at the time of retirement. Currently he is of the age of 40 years and has an amount of $25,000 in hand. How much interest rate a bank should offer so he has the desired amount at retirement. A. 11.00% В. 10.50% C. 10.96% D. 12.00%< A friend asks to borrow $51 from you and in return will pay you $54 in one year. If your bank is offering a 6.2% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $51 instead? b. How much money could you borrow today if you pay the bank $54 in one year? c. Should you loan the money to your friend or deposit it in the bank?
- Slick Sam has a special relationship with his banker. The nature of the relationship is as follows: • The bank owes Sam $100 per year forever. The 1st payment is due in 1 year. • The bank will borrow or lend money to Sam at a constant effective rate of i per year. Today, Sam calculated the present value of the payments that are due to him as X. Sam can receive his first 16 payments at the end of year 16 in a lump sum. If he does that, then the total value of the lump sum and future payments at the end of the sixteenth year is X + 2,000. Calculate X. A B с D E 3,330 3,350 3,400 3,450 3,5004. A friend was left $50,000 by his uncle. He has decided to put it into a savings account for the next year or so. He finds there are varying interest rates at savings institutions: a) 2.25% compounded every two months, b) 2.30% compounded quarterly, and c) 2.20% compounded continuously. He wishes to select the savings institution that will give him the highest return on his money. What interest rate should he select?K A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $1,000. Each year after that, you will receive a payment on the anniversary of the last payment that is 8% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 12% per year. a. What is today's value of the bequest? b. What is the value of the bequest immediately after the first payment is made? a. What is today's value of the bequest? Today's value of the bequest is $. (Round to the nearest dollar) b. What is the value of the bequest immediately after the first payment is made? The value of the bequest immediately after the first payment is made is $. (Round to the nearest dollar)
- 5. Your great uncle recently died and left you $50,000 in his will. The lawyers tell you that the will is complex and facing legal challenges and you cannot expect the money to be paid before the end of the next three years. They also warn that the money is invested in some funds that cannot be cashed out until five years from now. Your great uncle's bank pays an interest rate of 3% annually. What is the equivalent PV of that money today? What will it be worth at the end of five years? Why does the value change over time?When you were born, your grandparents put $5,000 in to a money market account to help with your college education. The bank gave them a guaranteed interest rate of 6% per year until you turned 18. How much money will be in the account on your 18th birthday if you never withdraw any money until that day? $11,417.20 $54,138.00 $1751.50 $14,271.50Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $6,801 in it and pays a(n) 3% interest rate. a. How much money would be in the account if you left the money there until your 25th birthday? b. How much would be in your account if you left the money in the account until your 65th birthday? c. How much money did your grandfather originally put in the account? a. How much money would be in the account if you left the money there until your 25th birthday? The future value is $ (Round to the nearest dollar.) b. How much would be in your account if you left the money in the account until your 65th birthday? The future value is $ (Round to the nearest dollar.) c. How much money did your grandfather originally put in the account? The present value is $ (Round to the nearest dollar.)
