It will be helpful to draw a time line when answering the questions. Make sure you show the inputs you use for each problem. If you don’t use a financial calculator, show the formulas that you use. Don’t just give the final answer. Without showing how to get the answers, you will receive less than half of the credits even if the answers are correct Draw Time Line, Write what input you use on Financial Calculator, Also say what Mode you used END MODE or BEG MODE
NO NEED TO TYPE THE ASSIGNMENT: HANDWRITTEN IS FINE
Part I (3 points each)
1)Douglas needs to borrow $25,600 today for his tuition bill. He agrees to pay back the loan in a lump-sum payment five years from now, after he is out of college. He bank states that the payment will need to be $29,683. If Douglas borrows the $25,600 from the bank, what interest rate is he paying on his loan?
2)Sarah’s retirement goal is $1,000,000. The bank is offering you a certificate of deposit that is good for forty years at 4.7%. What initial deposit does Sarah to make today to reach her $1,000,000 goal at the end of forty years?
3)Steve wants to buy a saving bond for her newborn niece. The face value of the saving bond is $1,000, the amount the niece would receive twenty years later. The government is currently paying 4.5% per year on savings bonds. How much is this saving bond cost today?
4)Paul and Mary are looking for a vacation place. They find a small but pleasant condo in Malibu listed at $534,000. They decide that now is not the right time to buy and that they will wait five years. The condos in Malibu appreciated each year at 2%. What will a similar condo sell for in five years?
5)You are the planning commissioner for Springfield, a growing city in the Southwest. The city council has estimated that the city’s population will increase very rapidly over the next twenty years, reaching an estimated 235,000. Today, the population is 105,680. What is the projected growth rate of this city?
6)Lowe’s has quoted a price of $23,150 to replace all the windows in Alex’s home.. Five years ago, Alex put $15,000 into a home improvement account that has earned an average of 6.0% per year. Does Alex have enough money in his account to pay for the backyard fix-up?
7)Russell is waiting to be a millionaire. He wants to know how long he must wait if
a)He invests $38,690 at 13% today
b)He invests $47,350 at 10% today
c)He invests $138,260 at 6% today
8)Brad and Wendy put $1,800 into a college fund every year for their son, Jack, on his birthday, with the first deposit one year from his birth (at his very first birthday). The college fund has a guaranteed annual growth or interest rate of 4.15%. At his eighteenth birthday, they will pay the last $1,800 into the fund. How much will be in the college fund for Jack immediately following this last payment?
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