Assignment 1.1
Solve problems by finding and using the Future Value, annunity table, and Present Value tables and show your solution process step by step including the formulas. You won’t get any credit, if you simply give the answer to the problem. You deposit $2000 today at 6% interest.
How much will you have in 5 years? You invest $5,000 today. You will earn 8% interest. How much will you have in 4 years? You have $450,000 to invest. If you think you can earn 7%, how much could you accumulate in 10 years? If a commodity costs $500 now and inflation is expected to go up at the rate of 10% per year, how much will the commodity cost in 5 years? How much would you have to deposit now to have $15,000 in 8 years if interest is 7%? If you want to have $10,000 in 3 years and you can earn 8%, how much would you have to deposit today?
If you think you can sell an asset for $25,000 in five years and you think the appropriate discount rate is 5%, how much would you be willing to pay for the asset today? How much will you have when deposit $25,000 for 9 years, if the interest is 12%? If you want to have $200,000 in 3 years and you can earn 12%, how much would you have to deposit today? If you think you can sell an asset for $60,000 in five years and you think the appropriate discount rate is 9%, how much would you be willing to pay for the asset today?
For example, you were buying a classic car. John is 25 years old right now. He needs $650,000 at age of 65 to retire comfortably. If his mutual fund account can generate an average annual rate of return of 7%, how much money he needs to put in right now? Bank Certificate of Deposit (CD) gives you 3% interests, how much money will you have in 20 years when you deposit $7500 today? John deposits $1000 into company Raw IRA each month (another type of retirement tool) that could earn 5% average each year. How much will her account be worth at the end of the 20-year period?
Steve receives $1500/month from a trust fund for 30 years when he turns 20 years old. What is the present value of total payment given discount rate of 7%. You rent a booth in Christina Mall to sell cell phone covers. You order the covers from a ware house for $28 a dozen (12 pieces). The average selling price for the covers is $9.98. You have to pay $3200 for the monthly rent and $200 administration fee every month.Calculate your monthly Break Even Point.
You rent a booth in Christina Mall to sell cell phone covers. You order the covers from a ware house for $28 a dozen (12 pieces). The average selling price for the covers is $9.98. You have to pay $3200 for the monthly rent and $200 administration fee every month. You also need to pay a sales person commission $1.2 per cover sold.Calculate your monthly Break Even Point.
