a. Your grandmother invested one lump sum 17 years ago at 4.25% interest. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much has your grandmother originally invested?

b. One year ago, the Beauty Skins Bhd deposited $3,600 in an investment account for the purpose of buying new equipment four years from today. Today, it is adding another $5,000 to this account. It plans to make a final deposit of $7,500 to the account next year. How much will be available when it is ready to buy the equipment, assuming it earns a 7% rate of return?

c. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why?

d. You borrow $149,000 to buy a house. The mortgage rate is 7.5% and the loan period is 30 years. Payments are made monthly. Determine the monthly interest payment that you have to make to settle the loan.

e. You are willing to pay $15,625 to purchase a perpetuity which will pay you and your heirs $1,250 each year, forever. If you’re required rate of return does not change, how much would you be willing to pay if this were a 20-year, annual payment, ordinary annuity instead of a perpetuity?

Answer rating: 100% (QA)

a Present Value 553992 x 1 1 0042517 273030 b Investment 3600x0... View the full answer