Question 2

a.(Basic future value) How much will you have in 5 years if you invest $25,000 for a 5-year period at an annual interest rate of:

a. 25%?

b. 12%?

c. 7%?

d. 0%?

b.(Basic present value) You have been told you will receive $75,000 at some time in the future. In the meantime you can earn interest at an annual rate of 6%. How much is the $75,000 worth to you today if the time you must wait for its receipt is:

a. 1 year?

b. 2 years?

c. 5 years?

d. 10 years?

c(Basic time period) You have $10,000 today. How long will it take for you to double your money if you can earn interest at an annual rate of:

a. 5%?

b. 8%?

c. 15%?

d. 100%?

d.(Basic interest rate) What annual interest rate, earned over 8 years, will make an initial $17,500 grow to be:

a. $20,000?

b. $25,000?

c. $35,000?

d. $50,000?

e. (Future value of an ordinary annuity) If you can earn at an annual interest rate of 8% per year, how much will you have accumulated if you save $3,000 at the end of each of the next:

a. 5 years?

b. 10 years?

c. 15 years?

d. 20 years?

f.(Amount of an ordinary annuity) How much must you pay at the end of each year to repay a $50,000, 14% annual interest rate loan if you must make:

a. 10 payments?

b. 15 payments?

c. 20 payments?

d. 30 payments?

g.(Present value of an ordinary annuity) You wish to create a bank account from which you can withdraw $10,000 per year at the end of each of the next 10 years. How much must you deposit today to provide these benefits if you can earn at a rate of:

a. 5%?

b. 12%?

c. 16%?

d. 20%?

h.(Length of an ordinary annuity) You have saved $250,000 and wish to retire today. For how many years can you draw $30,000, at the end of each year, if you can continue to earn interest at a rate of:

a. 5%?

b. 8%?

c. 10%?

d. 11%?

i.(Interest rate in an ordinary annuity) An insurance fund advertises that if you invest $50,000 today, you will receive a fixed amount at the end of each of the next 20 years. What interest rate are they giving you if the annual amount is:

a. $ 3,500?

b. $ 5,000?

c. $ 7,500?

d. $10,000?