Your mom is expected to get $140,000 in 15 years when she retires from her job. She, however, wanted to open a shop now to generate a second income when she becomes jobless. In order to finance her project now, how much maximum she could borrow from a bank in exchange of her retirement benefit if the interest rate is 12%?

2. You got delighted to have a news that you will get $45,000 in your bank account soon because your grandmother deposited some money as a gift on your first birthday. As you are busy with your studies, you are thinking of transferring the money to an investment account that will pay 10.5% per annum. How much will you have your in account if you transfer your money in that invest account and withdraw it after 10 years?

3. What is the present value of the cash flow of $3,000 at the end of 3^rd year, $5,500 at the end of 6^th year and $10,000 at end of ten year if the interest rate is 5%?

4. You are expected a cash flow of $2,500 at the end of 3^rd year, $4,000 at the end of 6^th year and $6,000 at end of ten year. If the interest rate is 8.5%, what is the future value of the cashflows at the end of year 21?

5. Recognizing that you are a new millionaire, someone proposed you to donate a fund so that poor children might have a warm meal every day at school for ever. An estimate shows that they need $20,000 per year for that lunch at school. How much must you donate if the fund can earn 6% per year?

Answer rating: 100% (QA)

Present Value of Retirement Benefit Since your mom wants the money now we need to find the present value PV of her future retirement benefit of 140000 ... View the full answer