1. How much money must you put into an account at the beginning of each of the 20 years to have $10,000 at the end of the 20th year? Assume the account pays 12% per year and round to the nearest $1.

2. Car Loans R They loan you $24,000 over four years to buy a car. The loan must be repaid in 48 equal monthly installments. The annual interest rate on the loan is 9 percent. What is the monthly payment?

3.  If you invest $10,000 in an investment that yields 14 percent compounded monthly, what will you have after 12 years (round to the nearest $10)?

4. You are considering investing in a project with the following possible outcomes:

Probability of investment States Occurrence Returns
State 1: Economic boom 18% 20%
State 2: Economic growth 42% 16%
State 3: Economic decline 30% 3%
State 4 : Depression 10%-25%
Find the expected rate of return and the standard deviation of the returns for this investment, respectively.

5. Suppose an investment is forecast to produce the following returns: a 20% probability of a return of $1,200; a 50% chance of a return of $5,600; and a 30% chance of a return of $9,500. What is the expected amount of return this investment will produce?

6. He discovers an antique in his attic that he bought at auction 10 years ago for $400. You auction it off on EBay and receive $8,000 for your item. What annual rate of return did he earn?

Answer rating: 100% (QA)

SOLUTION To have 10000 at the end of the 20th year we need to solve for the present value of the annuity Using the formula for present value of an annuity we get PV C 1 1rn r where PV is the present v... View the full answer