Reference no: EM132906288
Questions -
Q1. Marissa knows that she needs $35,000 for a down payment on a house. She found an investment that earns 3.25% interest compounding monthly. She would like to purchase the home in 5 years. How much should she put in the account now to ensure she has her down payment?
A. $25,892.04
B. $28,045.23
C. $29,757.10
D. $30,050.72
Q2. Jeffrey is saving up for a down payment on a car. He plans to invest $2,000 at the end of every year for 4 years. If the interest rate on the account is 2.15% compounding annually, what is the present value of the investment?
A. $7,587.82
B. $5,033.72
C. $8,261.72
D. $15,252.94
Q3. Olivia is 18 and would like to buy a house when she is 30. What is the discount factor for today's prices if the housing values increase 8% per year?
A. 39.7%
B. 60.3%
C. 92.6%
D. 96.0%
Q4. Aaron has an annuity that pays him $9200 at the beginning of each year. Assume the economy will grow at a rate of 3.2% annually. What is the value of the annuity if he received it now instead of over a period of 10 years?
A. $80,168.75
B. $77,682.00
C. $106,444.30
D. $109,850.52
Q5. Rudy has been awarded some money in a settlement. He has the option to take a lump sum payment of $200,000 or get paid an annuity of $1,000 per month for the next 25 years. Which is the better deal for Rudy, and by how much, assuming the growth rate of the economy is 2.75% per year?
A. Lump Sum: by $14,899.82
B. Lump Sum: by $43,535.88
C. Annuity: by $14,899.82
D. Annuity: by $43,535.88
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