Homework answers / question archive / 1) Which amount is worth more at 14 percent, compounded annually: $1,000 in hand today or $2,000 due in 6 years or 5000$ due in 10 years? Explain your answer? 2) While you were a student in college, you borrowed $18,000 in student loans at an interest rate of 3 percent, compounded annually

1) Which amount is worth more at 14 percent, compounded annually: $1,000 in hand today or $2,000 due in 6 years or 5000$ due in 10 years? Explain your answer? 2) While you were a student in college, you borrowed $18,000 in student loans at an interest rate of 3 percent, compounded annually

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1) Which amount is worth more at 14 percent, compounded annually: $1,000 in hand today or $2,000 due in 6 years or 5000$ due in 10 years? Explain your answer?

2) While you were a student in college, you borrowed $18,000 in student loans at an interest rate of 3 percent, compounded annually.   If you repay $1,500 per year, how long, to the nearest year, will it take you to repay the loan?

3) Your client is 40 years old and wants to begin saving for retirement. You advise the client to put $6,000 a year into the stock market. You estimate that the market’s return will be, on average, 12 percent a year. Assume the investment will be made at the end of each year. A) If the client follows your advice, how much will she have by age 65? B) if your client wants to have a pension salary ( retirement salary ) by age 65 and forever , how much the yearly salary is, assuming that the interest rate at that date = 5% ?

4) Adams Company bought a piece of land in 1981 for $200,000. By 2005, its value had increased to $1,582,200. Find the annual rate of appreciation during this period.

5) Your employer has promised to give you a $5,000 bonus after you have been working for him for 10 years. What is the present value of this bonus if the proper discount rate is 12%?

6) A downtown bank is advertising that if you deposit $1,000 with them, and leave it there for 60 months, you can get $1801 back at the end of this period. Assuming quarterly base compounding, what is the annual rate of interest paid by the bank?

7) Cincinnati Company has decided to put $30,000 per quarter in a pension fund. The fund will earn interest at the rate of 8% per year, compounded quarterly. Find the amount available in this fund after 10 years.

8) What is the effective interest rate for one dollar invested in the bank at 9% nominal annual rate compounded at daily basis ( use 365 days in a year )?