# Solution Time Value of Money Problems

Jun 10th, 2016
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Solution Question 1: Abigail Kolinchak has just graduated from college and was offered a great job. She goes to the dealership to purchase a brand new BMW Z4. The car cost \$60,000. She was able to put \$10,000 down and is going to borrow the remaining \$50,000. The Arizona National Bank will loan her the money for five years with a 6 percent interest rate. What will Abigail's monthly payments be? Question 2:Dax Collins just received \$10,000,000 from winning the lottery. He has decided to spend \$1,000,000 immediately and to invest the remaining \$9,000,000 for 10 years. If he can get a 12 percent interest rate compounded quarterly, how much will he have at the end of 10 years? Question 3: Juanita Aullman wants to start her own business when she graduates from college in three years and she needs \$150,000 to do so. How much money must she put aside today if she can earn 8 percent compounded semiannually? Question 4: Kylee Kolinchak is 22 years old and just finished college.

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Question 1: Abigail Kolinchak has just graduated from college and was offered a great job. Shegoes to the dealership to purchase a brand new BMW Z4. The car cost \$60,000. She was able toput \$10,000 down and is going to borrow the remaining \$50,000. The Arizona National Bankwill loan her the money for five years with a 6 percent interest rate. What will Abigail's monthlypayments be?CostDownpaymentLoanTermInterest Rate\$60,000\$10,000\$50,00056%Monthly Payment\$966.64yearsannually600.50%monthsmonthlyQuestion 2:Dax Collins just received \$10,000,000 from winning the lottery. He has decided tospend \$1,000,000 immediately and to invest the remaining \$9,000,000 for 10 years. If he can get a12 percent interest rate compounded quarterly, how much will he have at the end of 10 years?PrizeAmount SpentInvestmentTermInterestFV\$10,000,000\$1,000,000\$9,000,0001012%\$29,358,340.13yearsannually403%quartersquarterlyQuestion 3: Juanita Aullman wants to start her own business when she graduates from college in three years anshe needs \$150,000 to do so. How much money must she put aside today if she can earn 8 percent compoundedsemiannually?FVPeriodsInterestPV\$150,00038%\$118,547.18yearsannually64%semiannualsemiannuallys from college in three years andcan earn 8 percent compoundedQuestion 4: Kylee Kolinchak is 22 years old and just finished college. She would like to retire atthe age of 62. If she put aside \$3,600

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