Missouri State University, Springfield

FIN 381

Graded Homework #4

1)Tommy is 3.5 feet tall. If he grows at a rate of 8% for the next nine years, how tall will he be?

2. You borrow $1,000 at 4% annual interest for 9 years. How much will you repay at the end?
3. You bought a stock for $35. If you hold it 14 years and sell at an annual gain rate of 4%, what is your selling price?
4. You need $25,000 in 10 years; your investment pays 8% annual return. How much must you deposit now?
5. Someone promises to pay you $1,600 ten years from now. If the interest rate is 5%, what is that promise worth now?
6. Mrs. Rich just sold a Van Gogh for $4.5 million. She bought it 5 years ago and earned a 7% annual rate of return. What did she pay for the painting?
7. Which would you rather receive, $1,000 now or $2,500 in 10 years if the interest rate is 9%?
8. You borrow $25,000 now and will repay $54,000 in 20 years. What is the interest rate?
9. You bought a house 20 years ago for $70,000. You just sold the house for $104,000. What was your rate of return?
10. How long will it take for $500 invested now to grow to $2,000 at an annual rate = 4%?
11. How long will it take for a $2,500 deposit to grow to $5,000 at an annual rate of 3%?
12. What interest rate is required for $4,000 invested now to be worth $8,000 in 10 years?
13. You invest $15000 per year into your 401-k plan, and it returns an average rate of 8.8% over 30 years. What is the FV?
14. You put ten annual $70 payments into a bank, at a 9% interest rate. What will the account be worth in ten years?
15. You plan to retire in 20 years by investing $5,000 per year at 7%. What will you have at retirement?
16. How much would you pay to buy a 15 year note that will pay you $800 per year if you must earn 5% ?
17. A rental property returns $7,000 per year (end) net with an expected life of 40 years and will be worthless after that. If you require a 12% return, what is the property worth now?
18. You agree to repay a $50,000 loan in 10 annual payments of $13,000. What is the interest rate?
19. You are repaying a loan with 20 equal annual $2,000 payments at 6.5%. What was the principal?
20. If it takes seven annual payments of $50 to pay off a $250 debt, what was the interest rate charged on the loan?
21. You plan to invest $2,000 per year for ten years. If your goal is to have $40,000 at the end, what rate must you earn?
22. If you buy a house for $40,000, put $10,000 down, and borrow the rest on a 10% mortgage loan for 25 years, what will be the amount of your ANNUAL payments?
23. You and your spouse figure you will need $30,000 to cover the expenses of buying your first home. If you want to buy the home five years from now, and can earn 8% on your savings, how much must you save each year?
24. How many $1000 payments will it take to repay a $12,000 loan at 8%?