How much is your interest payment in the second month

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1. You want to quit your job and return to school for an MBA degree 5 years from now, and you plan to save $8,000 per year, beginning immediately. You will make 5 deposits in an account that pays 5.25% interest. Under these assumptions, how much will you have 5 years from today?

2. Your grandmother just died and left you $100,000 in a trust fund that pays 7.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account?

3. Your aunt has $500,000 invested at 5.25%, and she now wants to retire. She wants to withdraw $45,000 at the beginning of each year, beginning immediately. She also wants to have $50,000 left to give you when she ceases to withdraw funds from the account. For how many years can she make the $45,000 withdrawals and still have $40,000 left in the end?

4. What is the present value of the following cash flow stream at a rate of 6.5%? CFs: $0 $75 $225 $0 $300

5. What's the future value of $1,500 after 5 years if the appropriate interest rate is 6.25% (nominal rate), compounded semiannually?

6. You are considering buying a new car. The sticker price is $25,000 and you have $3,000 to put toward a down payment. If you can negotiate a nominal annual interest rate of 8 percent and you wish to pay for the car over a 5-year period, what are your monthly car payments? How much is your interest payment in the second month?

 

Reference no: EM13296562

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