1. You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years? 

2. You placed $700 in a savings account with a 10% nominal rate and would like to know how much the investment will be worth in 2 years (round to the nearest dollar). a. If the interest is compounded annually, calculate the value of investment at the end of two years? b. If interest is compounded on a monthly basis, calculate the value of investment at the end of two years? c. Calculate the effective interest rate as per the information in (b) above. 

3. If you want to have $1,700 in seven years, how much money must you put in a savings account today? Assume that the savings account pays 6% and it is compounded quarterly (round to the nearest $10). 

4. A commercial bank will loan you $7,500 for two years to buy a car. The loan must be repaid in 24 equal monthly payments. The annual interest rate on the loan is 12% of the unpaid balance. What is the amount of the monthly payments? 

5. If you invest $750 every six months at 8% compounded half-yearly, how much would you accumulate at the end of 10 years? 

6. What is the present value of $100 allowance received at the end of each year for seven years? The first payment will be received one year from today (round to nearest $10). The discount rate is 13%. 

7. Assume your investment have a three-year life and generate the cash flows at the end of each year shown below. What is the value of cash flows today if the discount rate is 8%? Year Cash Flows 1 $8000 2 $5000 3 $2000

Answer rating: 100% (QA)

1 Land Value in 10 Years If you purchased the land for 10000 and expect a 12 annual return you can use the future value formula to calculate its proje... View the full answer