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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