When you are 32, you win $20,000 in the lottery. You decide to spend half of your winnings immediately and place the other half in your retirement savings account (which is earning interest at 10% per year.  At 45 (after making the retirement account deposit), you decide to quit your job and take a two-year trip around the world. To help finance this trip, you withdraw 15% of the current balance in your retirement savings account.     What is the balance of your retirement savings account immediately after your withdrawal?

James has been working as a Mechanical Engineer ever since he graduated five years ago. Two years ago, he bought and financed a new $25,000 Jeep Compass and still owes $15,750 on his car loan. He has never been late with a car payment. James has one major credit card, with a $1,000 limit. He has had it since his senior year of college and was two months late with a payment one time during that first year. He is currently carrying a balance of $600 on this card. In the last year, James applied for six store credit cards at places that he shops a lot so that he can earn points and get discounts. He carries no balances Part 1: Calculate James’ credit score. Recalculate his credit score if he had not opened the six store credit cards.   Part 2: James is tired of paying rent and would like to purchase a condo so that he can start building equity in his home. He is looking for a 30-year mortgage to purchase a $240,000 condo. What interest rate does James qualify for on a mortgage with his…

If you want to withdraw $10,000 at the the end of two years and $35,000 at the end of four years, how much should you deposit into an account that pays 9% interest compounded annually?

Someone’s uncle leaves them $10,000 in his will, but with a requirement that they invest the money into retirement savings. Their brother suggests a Roth IRA, but their sister suggests a Traditional IRA. Explain which one they should choose.

Find the present value of $750 to be paid four years from now when the prevailing interest rate is 10 percent, if interest is compounded annually.

Susan has a choice between two perpetuities payable at the beginning of every month. The first pays $100 today and increases by 1% every month. The second pays $100 today and increases by $X every month. These two annuities are equally valuable at i= 20%. Find X.

Emily recently graduated with a B.A. in economics and was offered a job with a small but growing company for $40,600 per year. About the same time, Emily inherited $65,000. She decided to pass up the job and use her inheritance to purchase a bubble tea shop rather than put the money into a bond fund (as her uncle suggested), which would have paid 6 percent per year interest. Emily works full-time at her new business, and at the end of the year she had revenues of $77,000 and total explicit costs of $30,000. a. What was Emily's accounting profit or loss for the year? Accounting (Click to select) $ b. What was her economic profit or loss for the year? Economic (Click to select)

Suppose you think if you were to retire right now, you would have needed $50,000 each year to supplement your social security and maintain your desired lifestyle. But because there is on average 3% annual inflation, when you retire 30 years from now, you need more than $50,000 per year to maintain the lifestyle you like.    How much will be equivalent to $50,000 at retirement time when adjusted for inflation? What will be the face value of the bond that yields the equivalent of $50,000, found in #4 of Part B in coupon payment? How much annual payment in the retirement account is needed to accumulate the amount needed to purchase the bond when retiring?  What is the purchase power of the amount that will be received by your inheritors, measured in the current value of $ at the time of opening the retirement account?  (Hint: First calculate what the future value will be in 30 years, which is equivalent to $50,000 now and then solve the rest of the problem).

Find the present value of $750 to be paid four years from now when the prevailing interest rate is 10 percent, if interest is compounded annually.

Emily recently graduated with a B.A. In economics and was offered a job with a small but growing company for $40,200 per year. About the same time, Emily inherited $60,000. She decided to pass up the job and use her inheritance to purchase a bubble tea shop rather than put the money into a bond fund (as her uncle suggested), which would have paid 5 percent per year interest. Emily works full-time at her new business, and at the end of the year she had revenues of $78,000 and total explicit costs of $38,600. a. What was Emily's accounting profit or loss for the year? Accounting (Click to select) : $ b. What was her economic profit or loss for the year? Economic (Click to select) : $