Question 2 (10 points)

JF will retire 15 years from today and has saved $121,000 in her investment account for retirement. She believes she will need $37,000 at the beginning of each year for 25 years of retirement, with the first withdrawal on the day she retires. JF assumes that her investment account will return 8%. What is the amount she needs to deposit at the beginning of this year and each of the following 14 years (15 deposits in all)

Question 3 (10 points)

The current price of CRZY shares is 50. Over the coming year, there is a 40% probability that share returns will be 10%, a 40% probability that share returns will be 12.5%, and a 20% probability that share returns will be 30%. What is CRZYs expected return and standard deviation of returns for the coming year? Would you buy it?

Question 4 (10 points)

Basil Ali and Basma Ahmed borrowed $15,000 to finance their wedding and reception. The fully-amortizing loan at 11% requires equal payments at the end of each of the next seven years. Prepare their amortization schedule.

Question 5 (10 points)

You have saved EGP 2,000,000 and are intending to endow it to AUC in the form of a prize or scholarship. Please prepare a short email to the Board of Trustees of AUC explaining the objective of your endowment and for whom it is dedicated and the annual value. The current interest rate is 9%.