Description
1.After placing $13,000 in a savings account paying annual compound interest of 3%, Leona will accumulate what amount if she leaves the money in the bank for 4 years?
2.How many years will it take for $500 to grow to $1,051.82 at 9% interest compounded annually?
3.Alex Karez has taken out a loan of $180,000 with an annual rate of 10% compounded monthly to pay off hospital bills from his wife’s illness. If the most Alex can afford to pay is $3,500 a month, how long will it take to pay off the loan? How long will it take to pay off the loan if he can pay $4,000 each month? Use five decimal places for the monthly percentage rate in your calculations. If Alex can pay $3,500 a month, how many years will it take to pay off the loan?
4.What is the present value of a $650 perpetuity discounted back to the present at 10%? What is the present value of the perpetuity?
5.How much do you have to deposit today so that, beginning 11 years from now, you can withdraw $9,000 a year for the next 8 years (periods 11 through 18) plus an additional amount of $18,000 in the last year (period 18)? Assume an interest rate of 6%.
Course Textbook Titman, S., Keown, A. J., & Martin J. D. (2014). Financial management: Principles and applications (12th ed.). Upper Saddle River, NJ: Pearson.
Explanation & Answer
Attached.
Running head: FINANCIAL MANAGEMENT
Financial Management
Name
Institution
1
FINANCIAL MANAGEMENT
2
Financial Management Questions
1) Interest for period 1 = $13000*0.03*1
=$390.00
Amount at the end of period 1 = 390+13000 = $13390.00
Interest for period 2 = $13390*0.03*1
=$401.70
...
Review
Review
