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1) (18 points) Jane just won $25,000 in a lottery. She decides to invest the money for a period of 4 years and then use the accumulated amount to purchase a new car. First USA Bank is willing to pay 4% per year compounded monthly on a four-year investment, but they charge an administrative fee that is 2% of the amount invested and this has to be paid initially to the bank. First American Credit Union offers 3.6% per year compounded daily if she deposits the entire amount in a money market account. Which investment option should Jane choose and why? 2) (15 points) You want to accumulate $25,000 two years from now. You decide to make monthly deposits into a fund that pays a nominal rate of 6% per year compounded monthly. You deposit SX every month during the first year and $2X every month during the second year. Determine the value of X. 3) (15 points) EOY Net Cash Flow -$20,000 +$2,000 +$2,700 3 +$3,400 +$4,100 5 +$5,000 +S4,000 7 +$4,800 +$5,760 For the cash flow profile given above, an expression showing the present worth for an interest rate of 5% per year compounded annually is 0 1 2 4 6 8 (P|A 5%, (P/G 5%,_) + (P/F 5%, PW = (P/A1 5%, C5%, 5) 1) (18 points) Jane just won $25,000 in a lottery. She decides to invest the money for a period of 4 years and then use the accumulated amount to purchase a new car. First USA Bank is willing to pay 4% per year compounded monthly on a four-year investment, but they charge an administrative fee that is 2% of the amount invested and this has to be paid initially to the bank. First American Credit Union offers 3.6% per year compounded daily if she deposits the entire amount in a money market account. Which investment option should Jane choose and why? 2) (15 points) You want to accumulate $25,000 two years from now. You decide to make monthly deposits into a fund that pays a nominal rate of 6% per year compounded monthly. You deposit SX every month during the first year and $2X every month during the second year. Determine the value of X. 3) (15 points) EOY Net Cash Flow -$20,000 +$2,000 +$2,700 3 +$3,400 +$4,100 5 +$5,000 +S4,000 7 +$4,800 +$5,760 For the cash flow profile given above, an expression showing the present worth for an interest rate of 5% per year compounded annually is 0 1 2 4 6 8 (P|A 5%, (P/G 5%,_) + (P/F 5%, PW = (P/A1 5%, C5%, 5)