Georgia State University Business and Finance Questions

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znetnerguneel81997

Business Finance

Georgia State University

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Subject: Finance

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Part Four #2 What is the value today of a money machine that will pay $2,958.00 per year for 29.00 years? Assume the first payment is made one year from today and the interest rate is 9.00%. Submit Answer format: Currency: Round to: 2 decimal places. #3 What is the value today of a money machine that will pay $2,647.00 per year for 16.00 years? Assume the first payment is made 4.00 years from today and the interest rate is 6.00%. Submit Answer format: Currency: Round to: 2 decimal places. #4 What is the value today of a money machine that will pay $2,161.00 every six months for 17.00 years? Assume the first payment is made six months from today and the interest rate is 12.00%. Submit Answer format: Currency: Round to: 2 decimal places. What is the value today of a money machine that will pay $2,121.00 every six months for 22.00 years? Assume the first payment is made 5.00 years from today and the interest rate is 13.00%. Part Five #1 What is the value today of a money machine that will pay $5,819.00 per year for 24.00 years? Assume the first payment is made today and that there are 24.0 total payments. The interest rate is 12.00%. Submit Answer format: Currency: Round to: 2 decimal places. #2 Derek will deposit $3,708.00 per year for 29.00 years into an account that earns 8.00%. The first deposit is made next year. How much will be in the account 29.0 years from today? Submit Answer format: Currency: Round to: 2 decimal places. #3 Derek will deposit $1,521.00 per year for 19.00 years into an account that earns 6.00%, The first deposit is made next year. How much will be in the account 40.00 years from today? Submit Answer format: Currency: Round to: 2 decimal places. #4 Derek will deposit $2,610.00 per year for 19.00 years into an account that earns 12.00%. The first deposit is made today. How much will be in the account 19.0 years from today? Note that he makes 19.0 total deposits. Submit Answer format: Currency: Round to: 2 decimal places. #5 Derek will deposit $1,180.00 per year into an account starting today and ending in year 17.00. The account that earns 9.00%. How much will be in the account 17.0 years from today? Submit Answer format: Currency: Round to: 2 decimal places. #6 Derek has the opportunity to buy a money machine today. The money machine will pay Derek $45,250.00 exactly 17.00 years from today. Assuming that Derek believes the appropriate discount rate is 15.00%, how much is he willing to pay for this money machine? Submit Part One #4 Suppose you deposit $2,633.00 into an account today. In 14.00 years the account is worth $3,814.00. The account earned ____% per year. Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) #5 Suppose you deposit $1,533.00 into an account today that earns 15.00%. It will take ___ years for the account to be Part two #4 Assume the nominal rate of return is 11.57% and the real rate is 3.24%. Find the inflation rate of return using the exact formula. Part Three #2 Suppose you need to have $53,313.00 in an account 15.00 years from today and that the account pays 9.00%. How much do you have to deposit into the account 6.00 years from today? Submit Answer format: Currency: Round to: 2 decimal places. #3 Suppose you deposit $1,067.00 into an account 5.00 years from today. Exactly 19.00 years from today the account is worth $1,677.00. What was the account's interest rate? Submit Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243)) #4 Suppose you deposit $1,068.00 into an account 6.00 years from today that earns 10.00%. It will be worth $1,704.00 _____ years from today. Submit Answer format: Number: Round to: 2 decimal places. #5 Assume the real rate of interest is 4.00% and the inflation rate is 6.00%. What is the value today of receiving 13,364.00 in 10.00 years? Submit Answer format: Currency: Round to: 2 decimal places. Part 9 #2 Derek plans to retire on his 65th birthday. However, he plans to work part-time until he turns 74.00. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Exactly one year after the day he turns 74.0 when he fully retires, he will begin to make annual withdrawals of $148,763.00 from his retirement account until he turns 86.00. After this final withdrawal, he wants $1.72 million remaining in his account. He he will make contributions to his retirement account from his 26th birthday to his 65th birthday. To reach his goal, what must the contributions be? Assume a 8.00% interest rate. Submit Answer format: Currency: Round to: 2 decimal places. #3 A bank offers 4.00% on savings accounts. What is the effective annual rate if interest is compounded semi-annually? Submit Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434)) #4 A bank offers 7.00% on savings accounts. What is the effective annual rate if interest is compounded quarterly? Submit Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434)) Attempts Remaining: Infinity #5 A bank offers 6.00% on savings accounts. What is the effective annual rate if interest is compounded monthly? Submit Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434)) Part ten #2 A bank offers 9.00% on savings accounts. What is the effective annual rate if interest is compounded continuously? Submit Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434)) #4 Assume a bank offers an effective annual rate of 5.58%. If compounding is monthly what is the APR? Submit Answer format: Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434)) #5 Derek borrows $252,623.00 to buy a house. He has a 30-year mortgage with a rate of 5.92%. The monthly mortgage payment is $________. Submit Answer format: Currency: Round to: 2 decimal places. #6 Suppose you deposit $1,035.00 into an account 7.00 years from today. Exactly 13.00 years from today the account is worth $1,615.00. What was the account's interest rate? Submit Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243))
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Explanation & Answer

Hi, Please check the attached file for detials, let me know if you have any questions, thank you. Best, James

Part Four
#2
What is the value today of a money machine that will pay $2,958.00 per year for 29.00 years?
Assume the first payment is made one year from today and the interest rate is 9.00%.
30166.52

Submit

#2:
29

1
(1 + 0.09)𝑛
𝑛=1
1
1
1.09 − (1.09)30
= 2958 ∗
1
1 − 1.09
2958
1
=
∗ (1 −
)
0.09
1.0929
= 30166.52
𝑃 = 2958.00 ∑

Answer format: Currency: Round to: 2 decimal places.
#3
What is the value today of a money machine that will pay $2,647.00 per year for 16.00 years?
Assume the first payment is made 4.00 years from today and the interest rate is 6.00%.
26750.30

Submit
Answer format: Currency: Round to: 2 decimal places.

#3
16

𝑃 = 2647.00 ∑
𝑛=1

1
(1 + 0.06)𝑛

1
1

1.06 (1.06)17
= 2647 ∗
1
1−
1.06
2647
1
=
∗ (1 −
)
0.06
1.0616
= 26750.30

#4
What is the value today of a money machine that will pay $2,161.00 every six months for 17.00
years? Assume the first payment is made six months from today and the interest rate is 12.00%.

31049.55

Submit
Answer format: Currency: Round to: 2 decimal places.

#4
6 months interest rate is 12%/2 =6% and the number of payments is 17*2 = 34, therefore, the present
value of the money machine is
34

𝑃 = 2161.00 ∑
𝑛=1

1
(1 + 0.06)𝑛

1
1

1.06 (1.06)35
= 2161 ∗
1
1 − 1.06
2161
1
=
∗ (1 −
)
0.06
1.0624
= 31049.55

What is the value today of a money machine that will pay $2,121.00 every six months for 22.00
years? Assume the first payment is made 5.00 years from today and the interest rate is 13.00%.

16601.88
#5.
6 months interest rate is 13%/2 =6.5% and the number of payments is 22*2 = 44, however the first
payment is 5 years from now, so we need to discount 1/(1+13%)5 to get the present value for today,
therefore, the present value of the money machine is

44

2121.00
1
𝑃=

5
(1.13)
(1 + 0.065)𝑛
𝑛=1

1
1

1.065 (1.065)45
= 2121 ∗
1
1−
1.065
2121
1
=
∗ (1 −
)
5
0.065(1.13)
1.06544
= 16601.88

Part Five
#1
What is the value today of a money machine that will pay $5,819.00 per year for 24.00 years?
Assume the first payment is made today and that there are 24.0 total payments. The interest rate is
12.00%.
45297.00

Submit
Answer format: Currency: Round to: 2 decimal places.

23

𝑃 = 5819.00 ∑
𝑛=0

1
(1 + 0.12)𝑛

1
(1.12)24
1
1 − 1.12

1−
= 5819 ∗

5819
1
1.12 ∗ (1 −
)
0.12
1.1224
= 45297.00
=

#2
Derek will deposit $3,708.00 per year for 29.00 years into an account that earns 8.00%. The first
deposit is made next year. How much will be in the account 29.0 years from today?
385505.69

Submit
Answer format: Currency: Round to: 2 decimal places.

29

𝐹𝑉 = 3708.00 ∑(1 + 0.08)29−𝑛
𝑛=1

1
30
(1.08)
= 3808 ∗ (1.08)29
1
1−
1.08
3808
1
=
∗ 1.0829 ∗ (1 −
)
0.08
1.0829
= 385505.69
1−

#3
Derek will deposit $1,521.00 per year for 19.00 years into an account that earns 6.00%, The first
deposit is made next year. How much will be in the account 40.00 years from today?
51438.95

Submit

Answer format: Currency: Round to: 2 decimal places.
19

𝐹𝑉 = 1521.00 ∑(1 + 0.06)19−𝑛
𝑛=1

1
20
(1.06)
= 1521 ∗ (1.06)19
1
1 − 1.06
3808
1
=
∗ 1.0619 ∗ (1 −
)
0.06
1.0619
= 51438.95
1−

#4
Derek will deposit $2,610.00 per year for 19.00 years into an account that earns 12.00%. The first
deposit is made today. How much will be in the account 19.0 years from today? Note that he makes
19.0 total deposits.
185446.87

Submit
Answer format: Currency: Round to: 2 decimal places.
18

𝐹𝑉 = 2610.00 ∑(1 + 0.12)19−𝑛
𝑛=0

1
1

20
1.12
(1.12)
= 2610 ∗ (1.12)19
1
1 − 1.12
2610
1
=
∗ 1.1220 ∗ (1 −
)
0.12
1.1219
= 185446.87
#5
Derek will deposit $1,180.00 per year into an account starting today and ending in year 17.00. The
account that earns 9.00%. How much will be in the account 17.0 years from today?
47555.58

Submit
Answer format: Currency: Round to: 2 decimal places.
16

𝐹𝑉 = 1180.00 ∑(1 + 0.09)17−𝑛
𝑛=0

= 47555.58

#6

Derek has the opportunity to buy a money machine today. The money machine will pay Derek
$45,250.00 exactly 17.00 y...


Anonymous
I was struggling with this subject, and this helped me a ton!

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